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Chip stocks rebound after AI-led selloff wiped trillions off global markets

After a Nasdaq-led rout driven by fears that Democratic midterm gains would bring tighter regulation of AI and data centres, US chipmakers rebounded sharply on Friday. All three major US indexes still posted weekly losses, and Asian tech markets fell hard.

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The Nasdaq MarketSite building and its digital facade in Times Square, New York (2015 photo)
The Nasdaq MarketSite building and its digital facade in Times Square, New York (2015 photo)Credit: Photo: Luca Marfè / Wikimedia Commons, CC BY 2.0 (https://commons.wikimedia.org/wiki/File:NASDAQ_Market_Site_201506.jpg) — file photo

US semiconductor stocks staged a sharp rebound on Friday after one of the heaviest technology selloffs in more than a year. Investors had been reacting to fears that Democratic victories in this week's US midterm elections would bring tighter regulation of the artificial intelligence industry and the data centres it depends on.

The selloff

On Thursday, November 5, the S&P 500 fell 4.4%, its worst day since the "Liberation Day" tariff shock of April 2025, the Associated Press reported. The Dow Jones Industrial Average sank 1,833 points, or 3.4%, and the Nasdaq Composite tumbled 5.5%. That pushed the Nasdaq into "correction" territory, a fall of at least 10% from its recent high, according to AP, NBC News and UPI.

Chipmakers and companies supplying AI data centres were hit hardest. Nvidia fell more than 9% and AMD about 17%, according to AP and Reuters. NBC News reported that the Philadelphia semiconductor index dropped 12.3%, its worst day since March 2020. Estimates of the value lost varied by index: NBC put the Nasdaq 100's loss at $2.3 trillion, while Reuters and the BBC cited about $2.5 trillion.

The trigger was the scale of Democratic gains in Tuesday's midterm elections. NBC News reported that hundreds of candidates who had pledged to rein in AI data-centre construction were elected, including in major data-centre states such as Texas, Ohio, Michigan and Georgia. Reuters cited a UBS estimate that around 30% of expected US data-centre capacity additions in 2028 could be at risk from construction pauses.

Friday's rebound

On Friday, the S&P 500 rose 0.31% and the Nasdaq gained 1.1%, while the Dow Jones Industrial Average fell 0.46%, according to Reuters. The semiconductor index climbed 4.2%. Nvidia rose nearly 3% after its worst day since January 2025, when the emergence of Chinese AI model DeepSeek rattled markets. AMD, Intel and Micron closed up between 5% and 11%.

Despite the rally, all three major US indexes posted weekly losses. The MSCI All-World index fell 0.68%, and MSCI's broadest index of Asia-Pacific shares outside Japan lost nearly 3%.

Asia takes the hit

The selloff spread to tech-heavy Asian markets. Taiwan's stock market fell 4.5% on Friday and recorded its steepest weekly drop since September 2001, Reuters reported, and is now more than 20% below its early-October record. South Korea's KOSPI plunged as much as 8.8%, triggering a circuit breaker, before closing 6% lower. It lost more than a tenth of its value over the week.

In China, the tech-focused Star 50 index fell as much as 5.2% intraday. Optical-component makers with large US sales, such as Zhongji Innolight and Eoptolink, fell 9.2% and 7.3%. Both mainland China's CSI 300 and Hong Kong's Hang Seng still ended the week higher, helped by Beijing's market-support measures.

Jobs data overshadowed

The market turbulence overshadowed a stronger-than-expected US jobs report. Nonfarm payrolls rose by 165,000, and annual wage growth held at 3.1%, rather than slowing below 3% as some had expected, Reuters reported.

Why it matters

The swings show how much of the recent market rally rests on expectations of continued, rapid AI infrastructure spending. They also show how quickly political and local resistance to data-centre construction is becoming a market factor. Reuters noted the AI trade was already under pressure from worries that the huge cost of data centres could limit future returns.

This article is news reporting, not investment advice.

Sources

Image: Photo: Luca Marfè / Wikimedia Commons, CC BY 2.0 (https://commons.wikimedia.org/wiki/File:NASDAQ_Market_Site_201506.jpg) — file photo

About this article: prepared by The Daily Context editorial desk using automated, source-based reporting from the publications linked above. No reporter was on the ground.

Source: APRead original