Nasdaq posts biggest daily drop in 19 months on fears of AI regulations

The market downturn primarily affected companies central to artificial intelligence infrastructure. Chipmakers, which supply components for AI data centers, saw significant declines; Nvidia dropped over 9%, and the Philadelphia SE Semiconductor index plunged more than 12%. Data center operators like IREN and Applied Digital fell over 14%, with CoreWeave losing almost 10%.

Beyond these core infrastructure providers, other large-cap technology stocks also experienced losses, including Meta Platforms, Amazon.com, and Alphabet. Melissa Brown, global head of investment decision research at SimCorp, noted that any slowdown in the AI infrastructure buildout would raise concerns, as rapid expansion has largely driven the AI growth story.

However, the market's reaction was influenced by more than just AI regulation fears. Qualcomm's shares fell 9.5% after the chipmaker missed Wall Street estimates for fourth-quarter smartphone chip sales. Additionally, comments from Cleveland Federal Reserve President Beth Hammack and Richmond Fed chief Thomas Barkin hinted at possible future interest rate hikes, adding to investor uncertainty.