Tech stocks lose $2.5 trillion in one day after election and weak AI earnings

Tech stocks had their worst day in dollar terms on Thursday. The Nasdaq Composite, an index that tracks many of the biggest tech companies, fell 5.5%. That is an estimated $2.5 trillion in lost market value in a single day, according to the Wall Street Journal. Two things hit at once: weak earnings from AI companies and a strong night for Democrats in Tuesday's midterm elections.

What happened

The drop pushed the Nasdaq into what traders call a correction. Every sector in the S&P 500, a broad measure of large US companies, finished lower. Shares of chip makers, power producers, software firms and data center builders all fell.

• The seven biggest tech names lost about $1 trillion in value together.
• A chip index had its worst day since the early days of the pandemic.
• SpaceX and Tesla, both run by Elon Musk, fell more than 9%.
• Traders who made highly leveraged bets, meaning bets boosted with borrowed money, got hurt badly.

Reuters says it was the biggest one-day percentage drop for the Nasdaq since April 2025, when President Donald Trump announced sweeping tariffs. The Journal says it is the largest ever in dollar terms.

Why the election matters

Investors fear Democrats will end a hands-off approach to tech regulation. Congress can open wide investigations, and ties between AI firms and the White House are a likely target. Many tech leaders publicly sided with Republicans in recent years. Musk spent nearly $500 million this cycle trying to keep Democrats out of office.

Still, it is not clear that Democrats will follow through. The party has often settled for small changes, and Trump is still president. One investor called the market "extremely fragile."

The data center question

AI runs on huge buildings full of computers, called data centers. They use a lot of electricity and water. UBS estimates that about 30% of the US data center growth expected in 2028 could face construction pauses.

One analyst said Democratic governor wins make a slowdown in building the key theme going forward. Another said opposition will focus on projects placed in someone's backyard, straining the power grid and water systems. Projects still waiting on permits may face a difficult road.

What it means for you

If your retirement account or savings hold tech funds, expect some bumpy months. The selloff has not turned into a full panic over an AI bubble, which critics warn could happen if AI firms miss their growth goals. Former New York Fed president Bill Dudley has estimated the industry will need about $3 trillion in annual revenue to earn adequate returns. Local fights over data centers could also touch power and water costs in some communities.