Wall Street Rally Reverses as AI Stocks Lead Sharp Selloff

U.S. stocks plunged sharply on Wednesday after a one-day post-election rally, with the S&P 500 falling about 3.5% and the Nasdaq dropping 4.7% by midday, erasing gains for many investors. The sell-off was led by AI-related stocks, with Nvidia down 7.5%, AMD plunging 14.6%, and the Philadelphia Semiconductor Index falling over 8%. Investors fear Democratic control of Congress could lead to stricter reviews of data center construction, energy use, and environmental impacts, potentially slowing AI infrastructure investment. Beyond election concerns, analysts cite doubts about AI investment returns, weaker-than-expected earnings outlooks from chip companies, and profit-taking after the previous day's surge. UBS estimates roughly 30% of planned U.S. data center capacity by 2028 could be affected if some projects are paused.