AI stocks plunge sharply, Philadelphia Semiconductor Index falls about 12.3% in a single day

The selloff swept across the entire AI supply chain. The Philadelphia Semiconductor Index plunged about 12.3%, Nvidia fell about 9.3%, essentially erasing its cumulative gains since the start of 2026; SanDisk plummeted about 22%, while Micron Technology, Western Digital and AMD all fell around 17%. AI chip, memory and data center-related stocks that had previously been favored by capital became the hardest hit.

Michael O'Rourke, chief market strategist at JonesTrading, believes that one important impact of the election results is that the pace of data center construction may slow. In particular, political shifts in multiple states could cause this issue to continue weighing on the market.

As AI data centers continue to expand in scale, their enormous electricity and water demands are triggering growing opposition from local residents. Some communities worry that new data centers will drive up electricity bills, increase the burden on the power grid and put pressure on local infrastructure.

Meta President Dina Powell McCormick also said this week at The Wall Street Journal's tech conference that after the election, it will become more difficult for companies to build data centers. She acknowledged that the tech industry had not adequately explained to the public the benefits that such investments can bring.

Data center expansion faces headwinds, chip demand expectations hit

According to estimates from market research institutions, a considerable portion of planned data center capacity in the United States may be affected by potential construction restrictions. Among them, UBS estimates that about 30% of the new data center capacity planned in the United States for 2028 may be at risk due to construction pauses.

Another market analysis, citing Goldman Sachs estimates, said that short-term construction moratoriums could affect about 45% of planned data center expansion capacity in the United States. However, this figure still needs to be confirmed against Goldman Sachs' original report for its specific statistical scope.

This risk may transmit upstream along the AI supply chain. Delays in data center projects mean that procurement demand for GPU servers, memory chips, power equipment and other items may be postponed, thereby affecting the revenue growth expectations of related suppliers.

Among them, new cloud service providers that rely on debt financing for expansion face greater pressure. CoreWeave fell about 10%, and Nebius fell about 15%. Both companies rent computing power to AI companies by purchasing GPUs on a large scale and building data centers, and their business models are highly dependent on continued capital investment and growth in customer demand.

S&P Global Market Intelligence data shows that the spread on CoreWeave's five-year credit default swaps (CDS) rose to a record high, indicating heightened market concerns about its credit risk.

Chip and memory companies become the hardest hit by the selloff

In this tech stock decline, the performance of chip and memory companies is particularly noteworthy.

The Philadelphia Semiconductor Index plunged about 12.3% in a single day, the worst one-day drop in about six and a half years. AI chip leader Nvidia fell about 9.3%, AMD fell about 17%, and Marvell also fell about 17%.

Memory companies fell even more sharply. SanDisk plummeted about 22%, becoming one of the worst performers in the S&P 500; Micron Technology and Western Digital both fell about 17%.

Memory companies have benefited in recent years from growth in demand for AI servers, high-bandwidth memory and data center storage. This collective plunge shows that investors are not only worried about GPU demand, but have also begun to reassess the previously high growth expectations for the entire AI hardware supply chain.

The selloff also spread to data center power equipment suppliers and tech giants. Shares of companies such as GE Vernova and Constellation Energy fell, and Microsoft, Amazon and Alphabet were not spared either.

Over the past year, large tech companies and new cloud service providers have continued to increase investment in GPUs, servers and data centers, and stocks in related supply chains have risen sharply as a result. But as financing costs rise and data center construction faces more approval obstacles, the market has begun to question whether the investment returns of some AI companies can support their previously high valuations.

Ted Parkhill, founder and chief executive of Incline Investment Management, said the market is shifting from focusing on what AI can bring to focusing on how much it will cost to achieve that growth.

This plunge also reflects a changing judgment on Wall Street about the AI industry: growth in computing demand is no longer the only determining factor, and whether data centers can be completed on schedule, whether financing can continue, and when massive capital expenditures will generate returns are becoming issues investors pay more attention to.