Nasdaq 100 Tumbles 6% as Chipmaker Rout Deepens on AI Regulation Fears

A post-election slide in chipmakers snowballed, dragging the Nasdaq 100 down 6% as investors fled the sector on speculation the Democratic sweep in Congress will usher in a new era of regulation for artificial intelligence, Bloomberg reported. The 11% plunge in a gauge of chip giants put the group on course for its worst week since the April 2025 tariff meltdown. Nvidia tumbled 8%, while Qualcomm and Arm sank on underwhelming outlooks. Tesla and SpaceX each lost 11%, and Apple plans to raise about $7 billion in an investment-grade bond sale. The S&P 500 fell 3.7% as of 10:52 a.m. in New York, the Dow lost 2.5%, the Stoxx Europe 600 slipped 0.7% and the MSCI World Index dropped 2.7%. Bitcoin fell 5.5% to $75,737, ether dropped 6.9% to $2,249.55, and the yen gained 0.5% to 157.70 per dollar as haven currencies outperformed. Chris Murphy at Susquehanna International Group said the rotation out of chipmakers reflected growing concern about the pace and funding of AI spending given the risk of more regulation after the blue wave, even as earnings remain resilient and valuations have reset sharply. In a rush for safety, consumer staples and health care climbed, and the tech selloff lifted bonds despite a rebound in oil. Ten-year Treasury yields fell six basis points to 4.83% and German yields dropped three to 3.24%, while WTI rose 2.2% to $90.04 a barrel and spot gold added 0.9% to $4,098.39 an ounce. Bob Edwards at Edwards Asset Management said the AI trade is here to stay but remains volatile, and that investors should not overlook the duller corners of the market. He said he was not concerned about what the blue wave means for the AI buildout, since the president still has the veto pen and data centers bring jobs and tax revenue. JPMorgan Asset Management's Jordan Jackson and Stephanie Aliaga said data centers have become an easy political target as electricity bills rise, and that the elections reinforced opposition in Texas and Ohio, where incoming Democratic governors favor tougher development conditions. They noted statewide moratoriums have struggled to become law and that AI is not yet a clear voter priority. In corporate news, Microsoft declined to extend a Texas data center contract with Nscale ahead of the startup's planned IPO, Micron suspended plans for a memory chip plant in Taiwan over a protracted labor dispute, and Wendy's board unanimously rejected a roughly $1.4 billion offer from Nelson Peltz's Trian.