Qualcomm, Nvidia lead postelection chip sell-off as Nasdaq slides 5.5%

Chip stocks tumbled on Thursday, led by Qualcomm and Nvidia, after this week's US midterm election results and a weak Qualcomm forecast deepened Wall Street's doubts about the pace of the artificial intelligence buildout.

Qualcomm and Nvidia each fell more than 9%. Nvidia's market capitalization dropped by almost $450 billion, and the Nasdaq slid 5.5% — its worst day in 19 months and its steepest one-day decline since April 2025. Qualcomm's drop followed a disappointing forecast for the current quarter, issued alongside its results on Wednesday.

The selling spread across the sector. Advanced Micro Devices, Micron and Applied Materials all posted double-digit percentage losses. CoreWeave and other "neocloud" providers fell for a second straight day. Tesla and SpaceX each dropped more than 9%; Elon Musk had contributed hundreds of millions of dollars to try to get Republicans elected in Texas and elsewhere.

Election fallout for data centers

Democrats' sweep in Congress, and victories in the states with the most ambitious AI data center plans, have unsettled investors. Democrats won key governor and Senate contests in Texas and Ohio, took the governor's race in Georgia, and Sen. Jon Ossoff cruised to reelection there. Voters also decided 41 local ballot measures across 10 states that would restrict data center construction; according to Ballotpedia, they sided against the measures in every case except one, in Harwood, North Dakota.

"The technology is still going to continue on in terms of its development, but if there is a slowdown in the actual development and the buildings and the infrastructure and so forth, that's what stocks are going to trade off," Peter Boockvar, chief investment officer at OnePoint BFG Wealth Partners, told CNBC's "Squawk on the Street."

At the Wall Street Journal Tech conference on Wednesday, Meta President Dina Powell McCormick said building data centers is "going to be harder" following the elections, adding that one victorious governor had asked to meet after inauguration to avoid losing the investment and jobs. Meta, Alphabet, Amazon and Microsoft — whose spending plans extend past $100 billion a year — each fell between 2% and 4% on Thursday. Meta, Alphabet and Amazon have all recently turned free cash flow negative.

Supply, not demand

Qualcomm reported $650 million in data center revenue for the quarter, mostly from customizing and connectivity work, CEO Cristiano Amon said. "We don't have a demand issue; it's a supply issue," Amon told CNBC. "If I had more supply, I would probably be doing better."

A global memory shortage is driving up prices and making key components harder to obtain. Intel last week reported a 78% jump in data center revenue, but its stock fell on a weaker-than-expected forecast tied to the shortage, while AMD said this week that its data center sales more than doubled.

Richard Clode, a portfolio manager at Janus Henderson, told "Squawk on the Street" that there will be a "knee-jerk reaction" that could lead to delays. "We're not going to solve for that in terms of knowing the answers to that anytime soon, unfortunately," he said.

Source: CNBC.