AMD, Nvidia and Intel Lead Chip Stock Rout as Investors Price In Data Centre Curbs

By midday in New York, AMD was down 14.9%, Nvidia 7.3% and Intel 7.8%, and the Philadelphia Semiconductor Index had lost more than 8%, according to Investing.com. Figures shifted through the session: 24/7 Wall St. put the declines at 13%, 7% and 8%, while the Associated Press reported AMD down 13.1% and Nvidia down 6.3%, making Nvidia the heaviest single drag on the S&P 500 a day after it fell 3.2%. 24/7 Wall St. said Nvidia had dipped below $200 a share for the first time since August.

The selling goes to the core assumption behind chipmakers' valuations: that cloud providers and AI labs will keep building data centres at record pace. Tuesday's elections put that assumption to a political test. Democrats will control both chambers of Congress from January, and several winning candidates campaigned on pausing new data centre development.

Why Investors Turned on Chips

Analysts at Macquarie said the election of Democrat Gina Hinojosa as governor of Texas, where many large data centre projects are planned, may foreshadow stricter state rules for AI infrastructure, according to Investing.com. Hinojosa supports a statewide moratorium on data centre development, and Texas has the second-highest number of planned data centres in the country, The Verge reported. Analysts at Deutsche Bank said some technology stocks were trading poorly on uncertainty over "what the election result will mean for regulation of things such as data centers."

UBS analysts estimated that about 30% of expected US data centre capacity additions in 2028 could be exposed to potential construction pauses, according to a Reuters report. Voters also acted directly: of 45 local ballot measures on data centres, 33 had produced results that will restrict development as of Wednesday morning, according to a tally by Redbud Consulting cited by The Verge.

The Associated Press also pointed to concern that higher borrowing costs could slow the data centre build-out. The 10-year Treasury yield stood at 4.86%, down from above 5.30% last month but still elevated.

Company-specific news added to the pressure. Arm fell 11% after its current-quarter guidance failed to beat expectations, and Qualcomm dropped almost 12% after weak smartphone chip revenue and a warning about rising supply chain costs, Investing.com said. CoreWeave, which rents out access to AI chips, fell 10%, according to the AP. Nvidia is also dealing with Beijing's refusal so far to approve large-scale imports of its H200 processors, about 600,000 of which are sitting in Hong Kong, Reuters reported.

Broader Market Losses

The Nasdaq was down about 5.1% at 24,430.11 around midday, more than 10% below its most recent record close, while the S&P 500 fell 3.4% to 7,424.67 and the Dow Jones Industrial Average dropped 2.2% to 52,202.26, Investing.com said. The losses erased Wednesday's rally, when the Dow gained 3% in its best day since April 9, 2025. The AP said the S&P 500's fall was its worst since the 2025 tariff sell-off.

The selling began in Asia, where South Korea's Kospi fell 5.3% and Japan's Nikkei 225 lost 1.8%, according to the AP.

Not everyone saw the move as justified. Mohamed El-Erian, the former chief executive of Pimco, told CNBC the market was "overdoing it" and would likely keep doing so for a while, while saying he remained "completely bullish on the tech sector."

Investors now turn to October US non-farm payrolls data, due on Friday, ahead of a December Federal Reserve meeting at which a rate increase is expected, according to Investing.com.