Tech stocks are suffering their biggest selloff since Covid, as investors see premature end to AI datacenter boom

Tech stocks suffered their largest sell-off since the Covid pandemic on Thursday, as investors feared an early end to the AI datacenter boom. The tech-heavy Nasdaq plunged more than 1,340 points, or 5.2%, marking its biggest single-day drop since April 2025. The Philadelphia Semiconductor Sector index, tracking the 30 largest chip companies, fell more than 1,000 points, on track for its single-largest loss since March 2020.

Major tech companies like Meta, Microsoft, and Nvidia experienced significant declines, with Meta down 3.4%, Microsoft down 2.8%, and Nvidia down 8%. This marked a sharp reversal from the previous day, when shares rallied following the Democrats' win in the midterm elections. U.S. voters had approved measures to restrict the construction of AI data centers in the country.

Meta President Dina Powell McCormick acknowledged the new challenges, stating that building data centers in the U.S. would be more difficult. Analyst Dan Ives noted that tech industry capital expenditures growth might peak next year rather than in 2028 or 2029, as data center buildout slowed down due to regulatory hurdles, particularly in Texas.

Chip stocks, particularly Micron and AMD, took a severe hit, with Micron falling about 14% and AMD also down 14%. Neocloud companies, heavily in debt to build data centers competing with Amazon and Google, were particularly hard hit, with Coreweave down 9% and on track for an 18% decline over two days. Despite these losses, search advertising giant Google fared relatively better, down only 1.6%.