Wall Street's post-midterm rally fades as chip stocks plunge $3 trillion on AI fears

Wall Street's best post-midterm rally in 44 years reversed sharply on Thursday as chip and AI stocks plunged, erasing roughly $3 trillion in market value over fears that newly elected Democratic governors will pause data center construction. The Nasdaq fell 5.2% and the S&P 500 dropped 3.8%, with the Philadelphia Semiconductor Index down about 9.75% on track for its steepest loss since March 2020. AMD and Micron each lost roughly 15%, while Nvidia fell nearly 9%, following Wednesday's initial rally driven by hopes for steady policy under a divided government. The selloff was triggered by 41 ballot measures slowing data center buildouts, most passing in states like Ohio, with Texas a key concern after Democrat Gina Hinojosa beat Republican Gov. Greg Abbott. Asian markets fell overnight, and analysts remain split on whether political pushback will deflate an AI bubble or merely slow its growth.