Stocks plunge as AI regulation concerns mount after Democratic wins

The Dow Jones Industrial Average fell 3.44% to 51,523.06 points.

The broader S&P 500 lost 4.36% to 7,353.73 points.

The Nasdaq Composite dropped 5.52% to 24,315.00 points.

The Democratic party’s victory in the midterm elections means they will control both chambers of Congress starting in January. This success has fueled speculation about new regulations to govern the development of AI infrastructure, a sector that has propelled Wall Street to record highs this year.

Nvidia, a major player in the AI industry, plunged more than 9%, with other chipmakers also finishing in the red. The semiconductor sector as a whole declined by over 12%.

Other technology stocks, which had avoided negative trends on Wednesday, also declined, including Meta, Amazon, and Alphabet.

“Investors seem to be acknowledging that some of the newly elected members of Congress and some of the governors want to slow down the pace of AI infrastructure development,” noted Melissa Brown, head of research at SimCorp.

“It is unlikely that (Democratic lawmakers) will be able to simply stop everything, but any slowdown is concerning because the narrative around AI growth depends heavily on the rapid construction of the necessary infrastructure.”

The Nasdaq recorded its largest single-session decline since April 2025, when Donald Trump announced a range of tariffs against dozens of US trade partners. It is down 11.9% from its record high on October 6, confirming it has been in a correction since then.

Wall Street had finished Wednesday with a strong gain, benefiting from reduced political uncertainty following the Democrats’ election victory.

Investors will be watching Friday’s release of US October employment data.