AI firms hit in worst stock market crash for 18 months

Several major stock markets took a severe tumble across Thursday trading, as anything attached to artificial intelligence – and plenty which wasn’t – was sold off en masse by investors.

The S&P 500, an index of 500 of the biggest firms in the US, fell by 4.36 per cent, while the tech-focused Nasdaq 100 suffered its worst single day of trading since Donald Trump’s introduction of tariffs in April of 2025, falling more than 5.5 per cent.

Among the big names sold off were Nvidia, formerly the world’s biggest company by market capitalisation, which dropped just over 9 per cent, along with Elon Musk’s SpaceX (9 per cent down) and Tesla (10.8 per cent). But other chipmakers dropped even more, as Micron crashed almost 17.5 per cent across the day and AMD plunged 17.2 per cent.

The sell-off wasn’t confined to the US either, with European AI stocks dragging down Germany’s DAX and the Dutch AEX, with companies such as BE Semiconductor and ASML taking a hammering, before Asian stocks followed the same trajectory overnight. Japan’s Nikkei 225 and South Korea’s Kospi - which contains SK Hynix and Samsung - both ended up 6 per cent lower.

It is perhaps notable that some recovery is already being seen in pre-market trading, with some of those aforementioned US stocks already rising 4 per cent as investors opt to buy back into the lower prices, but further volatility cannot be ruled out due to concerns over tighter regulation following the US midterms. And not each individual stock has mounted a recovery - Intel fell almost 30 per cent in a single day last week and fell another 10 per cent on Thursday, leaving its stock price more than halved in the space of a month.

A large part of the sell-off appears to have been in reaction to the initial bump in trading following the elections.

Analysts at Goldman Sachs concluded that asset managers had sold off stocks prior to the US midterms, but bought back in following the unexpected results. As others were also buying in, prices rose faster, leaving some hedge funds to cut exposure or bank profits - and leading a near-indiscriminate sell-off across the board.

There are concerns that Democrats may not be as receptive or as easy to work with across the building of datacentres as the Trump administration have been, as well as additional regulation worries.

“Plenty of opportunities are starting to emerge, but it’s hard to know when the selling pressure will ease. In the meantime, names can trade well below what their fundamentals justify. And when the pressure eases, the rebounds can be violent,” read a note from Goldman, reported by Investing.com.

It wasn’t only AI-facing stocks that took a beating, however.

“Chip stocks took some of the heaviest damage, as investors weighed the potential impact on demand of a backlash against data centres and other AI infrastructure,” explained AJ Bell’s head of financial analysis Danni Hewson.

“Bitcoin also fell sharply for similar reasons, with hopes for a Trump administration-led deregulation of the crypto industry now looking a lot less certain.”

President Trump’s memecoin also hit a record low after the Republican party suffered losses in the midterm elections, falling below $1.12 at one stage before rebounding slightly to a present price of $1.21. It has lost around 99 per cent of value since early 2025.

In the wider stock market however, more legitimate optimism comes in the face of potentially lower oil prices, which would ease inflation concerns and boost industries such as airlines and those around consumer discretionary spending.

“The markets are betting that a weakened President Trump will be less willing to escalate the war with Iran, sending Brent crude oil down as much as 20 per cent this week,” said Jakub Rochlitz, market analyst at etoro.

“Cheaper energy could ease pressure on inflation, shifting interest rate expectations, which is broadly bullish for equities. This could be a positive for rate-sensitive sectors such as housing, REITs and utilities, which have seen their stock prices rise over the past weeks.”