Chipmakers plummeted on Thursday, with Nvidia pushing the Nasdaq to its worst day in 19 months, after this week’s midterm election results raised concerns on Wall Street that the artificial intelligence buildout is poised to slow down. Neoclouds like CoreWeave tumbled for a second straight day.
Qualcomm contributed to the selloff after issuing a disappointing earnings forecast for the current quarter. Qualcomm and Nvidia both dropped more than 9%, with the latter losing almost $450 billion in market cap. The Nasdaq slied 5.5%, its steepest slide since April 2025.
The environment has gone from bad to worse for companies intimately tied to AI infrastructure, as the combination of rising interest rates, ballooning capital needs and the Democratic sweep in Congress has led to increased fears that wide swaths of the market are going to be weighed down by too much debt and too little revenue.
“The technology is still going to continue on in terms of its development, but if there is a slowdown in the actual development and the buildings and the infrastructure and so forth, that’s what stocks are going to trade off,” said Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, in an interview with CNBC’s “Squawk on the Street.”
Advanced Micro Devices, Micron and Applied Materials all suffered double-digit percentage losses on Thursday. Elon Musk, who contributed hundreds of millions of dollars to try and get Republicans elected in Texas and elsewhere, saw shares of his public companies, SpaceX and Tesla, each drop more than 9%.
In Tuesday’s election, the states with the most ambitious AI data center plans all turned blue. Democrats won key contests for governor and the Senate in Texas and Ohio, while also coming up victorious in the gubernatorial race in Georgia, where Democratic Sen. Jon Ossoff also cruised to reelection.
There were 41 local ballot measures in 10 states up for a vote on Tuesday that would place restrictions on the construction of data centers in different ways, according to Ballotpedia. Voters sided against data centers in each measure except one in Harwood, North Dakota, according to an analysis by Ballotpedia and additional results gathered by CNBC on Wednesday.
On Wednesday night, at the Wall Street Journal Tech conference, Meta President Dina Powell McCormick told the audience that building data centers is “going to be harder” following the elections. She added that one of the victorious governors had said that, “As soon as we get past the inauguration, let’s meet because we don’t want to lose this investment in our town. We don’t want these jobs to go elsewhere,” according to the Journal.
Meta, like its hyperscaler peers — Alphabet, Amazon and Microsoft — has laid out an ambitious path for infrastructure development, with spending plans that extend well past $100 billion a year. Meta went free cash flow negative in the latest quarter, joining Alphabet and Amazon, which turned negative in the prior period. The hyperscalers each dropped between 2% and 4% on Thursday.
Qualcomm stock chart.
Qualcomm on Wednesday became the latest chipmaker to report booming growth in its data center business, though it’s still a relatively small unit for the company. Qualcomm had $650 million in data center revenue during the quarter, mostly from customizing and connectivity work, CEO Cristiano Amon said.
“We don’t have a demand issue; it’s a supply issue,” Amon told CNBC in an interview. “If I had more supply, I would probably be doing better.”
The problem for Qualcomm and fellow chipmakers Intel and AMD is that the global memory shortage is jacking up prices, making it harder to get key supplies and leading to surging prices for consumer devices.
Intel last week reported a 78% jump in data center revenue, but the stock got crushed due to a weaker-than-expected forecast from the memory shortage. And AMD said this week that sales in its data center business more than doubled in the latest period.
Investors are looking past the numbers and questioning the sustainability of that growth, and whether buyers of the technology will be able to put it all to use.
“There’s going to be a knee-jerk reaction, and that could lead to some delays, and that’s going to be some concerns,” Richard Clode, a portfolio manager at Janus Henderson, told “Squawk on the Street.” “We’re not going to solve for that in terms of knowing the answers to that anytime soon, unfortunately.”
— CNBC’s MacKenzie Sigalos contributed to this report.
WATCH: CNBC’s full interview with Janus Henderson’s Richard Clode
