U.S. stocks plunge as AI sell-off wipes out post-election rally

U.S. stocks plunged Thursday morning as another sell-off in AI-related shares erased the post-election rally, with the S&P 500 falling over 3 percent and the Nasdaq dropping 5 percent into correction territory. Investors worried that Democratic victories in Tuesday's midterm elections could bring government-ordered pauses on new data centers and tighter scrutiny of the AI buildout. Chip stocks led the rout, with Nvidia losing over 7 percent, AMD tumbling over 15 percent, and Qualcomm falling about 12 percent on weak smartphone chip sales. The VIX fear gauge jumped 48 percent, its biggest one-day gain since April 2025. Strong earnings elsewhere, including AppLovin's 30 percent surge, were drowned out by the AI losses. Analysts warned of more volatility ahead as investors digest election results and potential policy implications.