Major artificial intelligence stocks experienced their sharpest decline in 18 months on Thursday, with the tech-focused Nasdaq 100 suffering its worst single day of trading since April 2025, when tariffs were introduced, falling more than 5.5 per cent. The S&P 500, an index of 500 of the biggest US firms, fell 4.36 per cent. Nvidia, formerly the world's biggest company by market capitalisation, dropped just over 9 per cent, while Tesla fell 10.8 per cent and Elon Musk's SpaceX declined 9 per cent. Chipmakers took heavier losses, with Micron crashing almost 17.5 per cent and AMD plunging 17.2 per cent.
The sell-off spread beyond the United States, dragging down European and Asian markets. Germany's DAX and the Dutch AEX fell as companies including BE Semiconductor and ASML were hit hard. Japan's Nikkei 225 and South Korea's Kospi, which contains SK Hynix and Samsung, both ended 6 per cent lower. Intel fell another 10 per cent on Thursday, leaving its stock price more than halved in the space of a month after a 30 per cent drop the previous week.
Analysts attributed the sell-off to investor behaviour around the US midterm elections. Goldman Sachs concluded that asset managers had sold stocks before the elections, but bought back following the unexpected results, causing prices to rise rapidly. As this buying attracted other investors, some hedge funds cut exposure or locked in profits, triggering a near-indiscriminate sell-off. Concerns that a Democratic-led Congress may impose tighter regulation on datacentres and AI infrastructure, and be less receptive to industry expansion than the Trump administration, also contributed to the decline.
Additional pressure came from cryptocurrency markets. Bitcoin fell sharply as hopes for a Trump administration-led deregulation of the crypto industry appeared less certain following Republican losses in the midterms. President Trump's memecoin hit a record low below $1.12 before recovering slightly to $1.21, having lost around 99 per cent of its value since early 2025.
Goldman Sachs noted that while selling pressure persists, individual stocks may trade well below their fundamental value, and rebounds could be significant once pressure eases. Some market analysts identified potential positives elsewhere: Brent crude oil fell as much as 20 per cent this week as investors bet a weakened Trump would be less willing to escalate tensions with Iran, potentially easing inflation concerns and benefiting rate-sensitive sectors including housing, REITs and utilities. Early signs of recovery appeared in pre-market trading, with some major US stocks rising 4 per cent.
For UK investors and businesses, this sell-off could mean lower interest rate expectations if oil price declines ease inflation concerns, potentially benefiting mortgage holders and rate-sensitive sectors, although continued volatility in technology stocks remains a risk to portfolios and business confidence.