Breaking: Musk Loses $300B as AI Stocks Crash After Midterms

The stock market suffered a severe sell-off on Thursday, with the Dow Jones Industrial Average falling more than 1,800 points, a drop of 3.4 percent, to close at 51,868, according to The Guardian. This sharp decline erased the gains made on Wednesday, which had seen the Dow post its biggest daily gain of the year. The S&P 500 fell 4.3 percent, marking its worst day since April 2025 when President Trump announced sweeping global tariffs, according to The New York Times and The Guardian. The selling spread through every sector of the S&P 500 and gathered pace through the day, signaling a broad-based retreat from riskier assets.

The Nasdaq Composite experienced its worst day in 18 months, falling 5.5 percent and closing more than 11 percent below the record it set last month, according to The Guardian. This drop places the index in correction territory, defined as a fall of at least 10 percent from a recent high. An estimated $2.5 trillion in market value was wiped from the Nasdaq Composite, according to Dow Jones data cited by the BBC. The so-called Magnificent Seven technology companies, which include Apple, Nvidia, and Tesla, shed about $1 trillion in value in the single trading day, according to the BBC. This massive loss highlights the central role these firms play in the current market structure.

Elon Musk’s companies bore a significant portion of the market’s pain. Tesla fell nearly 11 percent and SpaceX fell 8 percent, taking more than $300 billion off the value of Musk’s companies, according to the BBC. This financial hit coincided with a difficult political week for the billionaire. Musk had spent nearly $450 million backing Republican campaigns, including at least $45 million in support of Ken Paxton for the Texas Senate seat. That specific bet failed when Texas went to the Democrats on Tuesday night, according to the BBC. The combination of market losses and political setbacks created a challenging backdrop for the entrepreneur’s business interests.

The primary catalyst for the crash was the Democrats' sweep of the House and Senate in Tuesday's midterm elections, according to CNBC. Democrats campaigned on slowing the spread of data centers and AI, and voters rejected data centers in a series of local ballots across the country, according to the BBC and The Guardian. In Texas, Democrat Gina Hinojosa won the race for governor after campaigning on an immediate moratorium on new data center construction. Democratic victories in states with large concentrations of planned data centers, including Ohio and Texas, heightened concerns that the facilities at the heart of the AI build-out will face new hurdles, according to CNBC and the BBC.

Investors are now weighing whether tighter state-level restrictions could slow data center construction, pressuring companies tied to the artificial intelligence trade. This concern sits on top of broader worries that the huge sums being spent on AI will not pay off and that AI shares may be in a bubble, according to CNBC. The Philadelphia Semiconductor Index, which tracks 30 of the largest chip companies, fell more than 12 percent and has fallen more than 30 percent since the beginning of October, according to The New York Times. The index is almost 40 percent below its peak in June, indicating a prolonged period of weakness in the chip sector.

Individual chip stocks led the rout on Thursday. Nvidia fell 9.2 percent, the biggest faller in the Dow, losing more than $400 billion in market value, according to The Guardian and the BBC. SanDisk fell more than 22 percent, while Western Digital fell 17 percent. AMD and Micron each fell more than 17 percent, and Intel fell 10.3 percent, according to the BBC and The Guardian. The iShares Semiconductor ETF fell 12 percent, its worst day since the Covid-19 breakout in March 2020, according to CNBC. These declines reflect deep skepticism about the near-term profitability of the hardware driving the AI revolution.

Wall Street's fear gauge, the Cboe Volatility Index, jumped as much as 5.7 points to above 28 about 90 minutes after the opening bell, according to The Guardian. This was its highest reading since March 31, 2026, the day after the S&P 500 bottomed during the Iran war tensions. By midday, nearly 800,000 VIX call options had traded, which is 3.5 times the 30-day average, according to Cboe data via CNBC. The 10-year Treasury yield fell to 4.83 percent, its lowest since September, as investors bought bonds as a haven, according to The New York Times. This flight to safety underscores the level of anxiety among institutional investors.

Analysts offered mixed perspectives on the future trajectory of the market. Neil Wilson, investor strategist at Saxo UK, said a complete capitulation-level event was playing out in tech stocks, noting that the fear is a total momentum unwind as Democrats pace the frontier and kibosh data center buildout, according to The Guardian. Dan Ives, a tech analyst, stated that there is no way to sugarcoat that Democrats taking control, especially over the Senate, will create some major hurdles for AI and tech legislation in the Beltway over the next two years. He said the midterm results are a clear sign the pace of data center build-out will start to slow, according to The Guardian.

Ted Parkhill, founder and chief executive of Incline Investment Management, said the market is moving from the promise of AI to the price of AI. He noted that while AI is going to be transformative for the world in the long run, it does not mean every AI-related stock is currently priced appropriately, and there is going to be a lot of turmoil, according to The Guardian. Susannah Streeter, chief investment strategist at Wealth Club, said fresh panic over the AI trade has hit Wall Street hard. She observed that fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on are now colliding with the prospect of a sharp slowdown in data center construction, according to the BBC.