Shares in technology companies plummeted Thursday, significantly compounding recent declines and sparking concerns about the durability of the artificial intelligence boom that is driving much of U.S. economic growth.

The tech-focused Nasdaq 100 index dropped more than 6%.

The S&P 500 plunged 4%, putting it on track for its worst day since April 2025, when President Donald Trump’s global tariffs rocked markets. The drop erased more than $2.5 trillion from the index’s value.

The broader Nasdaq Composite, which tracks more than just tech stocks, fell 5.3% and entered “correction” territory on Thursday, which is when a stock or index declines at least 10%.

Tech stocks have surged in recent years as excitement about artificial intelligence has fueled billions of dollars in investments in, and by, the companies that make chips and infrastructure necessary for AI’s development and operation.

Since Election Day 2024, the Nasdaq Composite has surged almost 40%.

But questions about whether AI will enable the kind of productivity necessary to generate returns on those investments have grown louder in recent months.

“I don’t think this is an AI bubble bursting,” said Ed Yardeni, longtime market watcher and president of Yardeni Research. “I think it’s an AI bubble losing some air very, very rapidly, and I think that reduces the likelihood that we’ll get a bursting bubble that has adverse consequences for the economy and broader financial system.”

Markets’ midterm blues

Also contributing to losses were the commanding Democratic victories across the country in Tuesday’s midterm elections.

Numerous Democrats who won races for governor, attorney general and Senate and House seats have pledged to slow or halt the construction of AI data centers.

Texas, Ohio, Michigan and Georgia were of particular concern, because they are all large data center markets.

“Today is the cold shower that I anticipated might occur after a blue-wave situation,” Yardeni said.

Elon Musk’s companies SpaceX and Tesla each slid nearly 10%, largely in response to the midterm results. But the two companies are also engaged in developing AI, and SpaceX has recently emerged as a data center developer.

Musk, the world’s first trillionaire, spent hundreds of millions to help elect Republican midterm candidates. Until Tuesday’s rout, he was seen as one of the largest potential beneficiaries of Republican victories.

Now that voters have so resoundingly rejected the GOP, Musk and his companies face the prospect of tighter regulation and even potential investigations at both the state and federal levels.

Chip stocks lead losses

The sell-off was triggered by two lackluster earnings reports from major chipmakers, Qualcomm and Arm Holdings, which were released on Wednesday night. Both companies posted results that investors generally viewed as mixed.

The two companies were among the worst performers on the Nasdaq indexes, sliding 12%.

The Philadelphia semiconductor index sold-off by 11%, putting it on course for its worst day since March 2020, when the coronavirus pandemic began to shutter the economy. The “DRAM” ETF, which tracks firms that manufacture computer memory, sank 15%.

Earnings reports like these have rattled investors in recent months because of the hundreds of billions of dollars that are being poured into the AI sector.

SanDisk shares plummeted 20%, Western Digital and AMD fell 15%, while Seagate and Micron shares fell about 13%. All of those firms were among the worst performing S&P 500 stocks.

Oil prices rebounded from Wednesday’s drop. As of midmorning trading, Brent and U.S. crude oil rose nearly 2%.

U.S. Treasury yields, which have faced some competition from tech giants tapping the bond markets to raise funds for their AI ambitions, were slightly lower.

The Dow Jones Industrial Average dropped 1,600 points or 3%. The biggest contributor to the Dow’s drop was Nvidia, which sold off by 9%, its largest one-day decline since April 2025.

Nvidia is the most important supplier to any AI firm, but as investors raise questions about returns, the euphoria in the industry is fading. Nvidia’s shares have tanked 15% over the past three months.

Major established cloud computing providers Alphabet, Meta, Amazon and Microsoft also fell, but less than the overall market declines.

Dow components Cisco and Caterpillar, which are both major suppliers to AI data centers, also dropped around 5%.