Nasdaq Falls 3.3% as Election and AI Policy Concerns Weigh on Tech

U.S. technology shares tumbled Thursday as investors weighed whether Democratic control of both chambers of Congress and wins in key governor races could bring tighter rules for artificial intelligence infrastructure.

The Nasdaq Composite slid 3.3%, while the S&P 500 fell 1.9%. The Dow Jones Industrial Average lost 489 points, or 0.9%, as gains in Chevron and Johnson & Johnson failed to offset technology-sector losses.

AI-linked shares, including chipmakers and data center stocks, fell for a second session. The Philadelphia Semiconductor Index dropped 8% to its lowest level since April 20. AMD fell 12%, Micron Technology lost 9%, SK Hynix declined 8.8% and Nvidia fell 5%.

The Nasdaq closed more than 10% below its record close set Oct. 6. U.S. stocks had rallied sharply Wednesday after the midterm results, before technology shares extended a two-session retreat.

Jordan Watson, a portfolio manager at Tandem Investment Advisors, said the recent rally and shift away from AI shares may prove temporary. He said markets may face more volatility as investors assess the election results and their possible policy effects.