AI Stock Rout: S&P 500 Drops 3.9% on Data Center Fears

The S&P 500 fell 3.9 percent on Thursday, marking its steepest decline since April 2025.

The sell-off erased all gains from Wednesday, which had been the strongest trading day in three months. The Dow Jones Industrial Average lost 1,656 points, or 3.1 percent, by 1:46 p.m. Eastern time. The Nasdaq composite dropped 5.2 percent, placing it more than 10 percent below its October peak. This level of decline classifies the market as being in a correction.

Investors reacted to concerns that the cost of borrowing money may slow the construction of new artificial intelligence data centers. Global markets felt the pressure, with South Korea’s Kospi index falling 5.3 percent. Tuesday’s midterm election results added to the uncertainty. Democratic victories raised the possibility of government pauses on data center projects, which could reduce demand for AI chips, electricity, and other related goods. These sectors have driven much of recent U.S. economic growth.

Nvidia, the heaviest weight in the S&P 500, fell 8.7 percent, extending a 3.2 percent loss from the previous day. Advanced Micro Devices dropped 15.5 percent, and CoreWeave, a cloud provider for AI chips, fell 12.5 percent. GE Vernova, a supplier of power equipment for data centers, sank 7.7 percent. A 1 percent move in Nvidia impacts the S&P 500 more than a 1 percent move in nearly any other U.S. stock. Every sector in the S&P 500 lost value during the session.

A few companies bucked the trend. AppLovin jumped 28.5 percent after reporting revenue and profits that exceeded analyst expectations. The company approved a buyback program worth up to 3.2 billion dollars, bringing the total potential value of its share repurchases to 3.6 billion dollars. Tapestry, the parent of Coach and Kate Spade, rose 6.5 percent after posting higher profits and raising its annual revenue and earnings forecasts.

In other markets, Brent crude oil prices rose 3.6 percent to 98.03 dollars per barrel, recovering from a nearly 9 percent drop the day before. The 10-year Treasury yield fell to 4.83 percent from 4.90 percent late Wednesday. It had stood at 4.95 percent on election night and above 5.30 percent last month. This decline suggests investors are moving into U.S. Treasury bonds for safety, despite reports that fewer workers applied for unemployment benefits and that summer productivity improved more than expected.

International indexes showed mixed results. Japan’s Nikkei 225 fell 1.8 percent on tech stock losses. London’s FTSE 100 dipped 0.4 percent after the Bank of England raised its main interest rate for the first time in three years. Bank Governor Andrew Bailey stated that future rate decisions depend largely on the outcome of the Iran war. He noted that resolving the Middle East conflict would be the best outcome for global stability.