Stock Market Plunges Over AI Fears: Dow Falls More Than 1,800 Points as Tech Sell-Off Deepens
Stocks suffered a major sell-off on Thursday as investors’ fears about a slowdown in the buildout of artificial intelligence rocked not only the AI trade itself but also the broader market. All three major indexes posted a record single-day fall, with the Nasdaq Composite confirming a correction from its all-time high. The Dow Jones Industrial Average plummeted more than 1,800 points, underscoring the severity of the panic. Shares of Nvidia, whose advanced chips are a key component in developing ever more powerful AI models, fell 9%, leading the tech-heavy decline.
The turmoil was exacerbated by alarming signals in the credit markets. CoreWeave’s bond yields surged to record highs above 17%, while SpaceX saw its credit default swap costs spike significantly higher than other tech peers. These developments suggest growing stress in the financing of AI-related infrastructure. A slowdown in erecting data centers could deal a major blow to AI companies, which are pouring billions into the buildout and banking on widespread adoption of the technology. The shift in Congressional control is expected to usher in heightened federal scrutiny, potential subpoenas regarding AI safety, and strict local restrictions on data center construction across key states like Texas and Ohio. Lawmakers are preparing to revive bipartisan regulation like the Frontier Act to mandate auditing and transparency for major AI developers, while key executives and companies tied closely to the previous administration risk formal Congressional inquiries.
Adding to the unease, a recent study ruled out compute expansion as the primary driver of the speedup in AI capabilities, warning that the lack of technical bottlenecks could compound risks surrounding recursive self-improvement. This scientific uncertainty, combined with political headwinds, has intensified investor anxiety. “Whether the midterms shock turns out to be the catalyst that derails the AI equity boom remains to be seen, but it strengthens our sense that the boom is in its final innings,” said Maher, a market strategist. The AI trade slid for the second consecutive day as fears of Democratic anti-AI policy weighed on investors, with the sell-off spreading beyond technology into the broader market.
The confluence of regulatory, financial, and technical risks has created a perfect storm for AI-related stocks. As the mid
Shimanta Das 
