• U.S. stocks deepened losses Thursday, with the S&P 500 down as much as 4.00% intraday, as semiconductor and AI infrastructure shares led a broad selloff.
  • Investors are reassessing data-center growth prospects after midterm elections, with analysts flagging potential construction delays and tighter oversight.
  • Qualcomm (NASDAQ:QCOM) slumped nearly 10% on weak smartphone-chip demand, while some AI-linked names bucked the trend.

AI Jitters Spark Broad Selloff

U.S. equities extended their decline Thursday, with the S&P 500 falling 4.00% intraday, according to a news flash that has yet to be confirmed by independent reporting. The selloff was driven by mounting pressure on semiconductor and artificial-intelligence infrastructure shares, as investors reassessed data-center growth prospects following the midterm elections. The decline follows Wednesday’s 1.6% rally in the S&P 500, which had initially reflected relief over reduced election uncertainty and falling oil prices.

The reversal comes as election results, including Democratic victories in key data-center states, raised concerns about potential construction pauses and tighter oversight. UBS (NYSE:UBS) strategists estimated that approximately 30% of expected data-center additions in 2028 could be affected by pauses. They also cautioned that semiconductor valuations were already near multiyear lows, suggesting some pessimism may already be reflected in prices. A Schwab (NYSE:SCHW) policy analysis identified public backlash against rapid data-center expansion as a significant election issue.

Earnings Add to the Gloom

Company earnings added to the weakness. Qualcomm fell about 9.6% in premarket trading after smartphone-chip sales missed expectations, reflecting sluggish demand and declining Apple (NASDAQ:AAPL)-related revenue. Snap (NYSE:SNAP) and Fair Isaac (NYSE:FICO) also fell following disappointing results. AppLovin (NASDAQ:APP) moved in the opposite direction, jumping roughly 20% after stronger-than-expected quarterly profit. These divergent reactions show that the session began as a sector and earnings-driven rotation; the retrieved reporting does not conclusively explain every additional leg of the later broad-market decline.

Inflation remains elevated, and the Federal Reserve raised rates in September, with markets pricing another increase in December. Those conditions leave equities sensitive to both earnings disappointments and changes in interest-rate expectations. Oil provides a countervailing influence. Brent fell more than 8% Wednesday on expectations that the election outcome could increase pressure to de-escalate the Middle East conflict, then partly rebounded Thursday. Lower oil could ease inflation and household costs, but the geopolitical outcome remains uncertain.

Global Contagion

The AI weakness is also international. South Korea’s Kospi fell 5.3%, with Samsung Electronics (KRX:005930) losing 7.6% and SK Hynix (KRX:000660) 9.4%. Japan’s Nikkei declined 1.8%, with chip-equipment and AI-linked companies among the major losers. Taiwan’s Taiex fell 3.2%. Several European and other Asian markets rose, indicating that the early global reaction was not uniformly negative.

The next major scheduled tests are the October U.S. employment report on November 6 and inflation data on November 10. Schwab reported expectations for 65,000 additional payrolls and 4.2% unemployment; strategist Liz Ann Sonders argued that a substantially weaker jobs report would likely be needed to shift the Fed away from its inflation focus. The key market question is whether selling remains concentrated in AI-linked businesses or broadens further. The retrieved reports establish early sector divergence and a later reported deterioration, but not a verified 1:01 p.m. cross-sector breakdown.

Two competing interpretations deserve attention: Slower data-center expansion could hurt semiconductor, construction, and power-equipment demand, while reduced capital spending could improve cash flow for the largest cloud platforms. Schwab noted that Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) initially rose on that interpretation. Swissquote (SIX:SQN)’s Ozkardeskaya characterized the election as a potential additional obstacle to an AI investment story already facing questions about spending, returns, and financing. UBS offered a more qualified assessment: construction risks are meaningful, but some semiconductor pessimism may already be priced in. Neither analysis establishes that a prolonged bear market is inevitable.

Correction: An earlier version of this article misstated the exact time of the S&P 500’s 4.00% decline. The headline figure remains unverified by independent reporting and should be treated as an intraday news flash.