Did the Midterms Trigger the AI Chip Sell-Off? What 4–5 November 2026 Tells Us

Moves to 5 Nov 2026 close.

Short answer: partly. On 4 November, the first session after Democrats won both chambers of Congress, the S&P 500 rose while data-centre power and memory stocks fell — that split is the clearest sign of an election effect. The much bigger fall on 5 November mixed the election with weak chip earnings, rate worries and profit-taking. We found no report of a new law or rule; markets are pricing a risk, not a fact.

Key Takeaways

The election move came first and was narrow: on 4 Nov the S&P 500 ETF rose +1.7% while NRG Energy fell −13.5%, Sandisk −7.9% and Micron −7.0% (IBKR closes).
The crash on 5 Nov had several causes: the S&P 500 fell 4.4% and the Philadelphia Semiconductor index 12.25% [S13] [S14], as Qualcomm and Arm disappointed investors [S10] [S11]; Nomura blamed year-end profit-taking [S14], while eToro pointed to the election [S15].
Fear, not policy, so far: the triggers were campaign pledges by incoming governors to pause data-centre approvals, an exit poll showing local opposition to data centres and one congresswoman’s call for an AI pause [S3] [S5] [S6] [S8]; we found no report of a post-election bill or moratorium by 5 Nov.

What Happened

Stock	3 Nov close	4 Nov	5 Nov	Two days
Sandisk (SNDK)	US$1,126.52	−7.9%	−22.3%	−28.4%
Micron (MU)	US$855.10	−7.0%	−17.5%	−23.2%
Western Digital (WDC)	US$347.35	−6.8%	−17.4%	−23.0%
Lam Research (LRCX)	US$230.72	−4.0%	−16.4%	−19.7%
SK hynix (SKHY)	US$150.79	−5.1%	−13.4%	−17.8%
AMD	US$483.90	+1.0%	−17.3%	−16.4%
Applied Materials (AMAT)	US$381.92	−3.3%	−13.6%	−16.4%
NRG Energy (NRG)	US$96.26	−13.5%	−3.2%	−16.3%
NVIDIA (NVDA)	US$206.69	−3.2%	−9.3%	−12.1%
Qualcomm (QCOM)	US$164.43	+5.3%	−9.5%	−4.7%
S&P 500 ETF (SPY)	US$754.35	+1.7%	−4.4%	−2.8%

Closing prices from IBKR (regular trading hours). Sorted by the two-day move.

Chart 1. Daily moves on 4 and 5 November 2026, IBKR closes. Power and memory stocks fell on 4 Nov while the S&P 500 rose; on 5 Nov everything fell.

Index	4 Nov close	5 Nov close
S&P 500	+1.6% to 7,688.62 [S12]	−4.4% to 7,353.73 [S13]
Nasdaq Composite	+1.4% to 25,736.51 [S12]	−5.5% to 24,315 [S13]
Dow Jones	+3.0% to 53,356.12 [S12]	−3.4% to 51,523.06 [S13]
Philadelphia Semiconductor (SOX)	n/a	−12.25% to 9,011.14 [S14]

The Election Link

The result: AP called the Senate for the Democrats late on 3 Nov and the House early on 4 Nov [S1] [S2].

What investors feared: a slower and costlier data-centre build-out in the US. Forbes reported concern about “heightened data center restrictions” [S3]; incoming governors in Ohio and Texas had pledged conditional or immediate pauses on data-centre approvals [S3] [S8]; Fortune counted 41 ballot measures on slowing data-centre building, most of which passed, and noted that opposition is not purely partisan — Texas’s Republican governor had already paused new permits in September [S4]. Fast Company cited an NBC/SSRS exit poll reported by Reuters in which about 76% of voters opposed new data centres where they live [S5]. On 4 Nov Rep. Yassamin Ansari called for “a pause on advanced AI development” to be at the top of the Democratic agenda [S6] [S7], and Meta’s president, Dina Powell McCormick, was reported as saying building new US data centres would become much harder [S9].

The evidence in prices: on 4 Nov the broad market rose (S&P 500 +1.6% [S12]) but the stocks most tied to US data-centre building fell: NRG Energy −13.5%, Sandisk −7.9%, Micron −7.0%, Western Digital −6.8% (IBKR). An aggregator report cites UBS saying “data center pauses will slow the pace of buildout into 2028” [S8]. NVIDIA, which sells worldwide, fell only −3.2% that day.

What Else Hit Chips on 5 November

Earnings: Qualcomm’s profit guidance came in below expectations, although its revenue guidance beat, and it blamed rising manufacturing costs [S10]; reports also cited a disappointing reaction to Arm [S11]. Qualcomm closed −9.5% on 5 Nov after rising +5.3% on 4 Nov (IBKR).
Rates: AP notes AI stocks have swung for months on fears that higher borrowing costs slow construction [S17]; Reuters reported traders expect the Fed to raise rates next month [S16].
Positioning: Nomura’s Charlie McElligott put much of the move down to hedge funds locking in profits before year-end — “They’re shooting the generals” [S14].
The election as the main driver: eToro’s Jakub Rochlitz said “the obvious catalyst for the sharp selloff is that markets are pricing in the midterm results” [S15].

Fact vs Fear

Claim	Status at 5 Nov	Source
Democrats control both chambers	Fact (AP call)	[S1] [S2]
New federal limits on data centres or AI	None reported in our sources as of 5 Nov	[S3] [S8]
State data-centre pauses	New pauses pledged by incoming Ohio and Texas governors, not yet in force; Texas already paused new permits in September pending a grid audit	[S3] [S4] [S8]
Local opposition to data centres	Exit-poll evidence (about 76% opposed locally)	[S5]
AI demand cut	Not reported; Futurum’s Daniel Newman: “Forecasts remain intact. Location is now fungible.”	[S6]

Was It Overdone?

Views split. A Yahoo Finance article by Michael Douglass argued “the selloff looks overdone” with NVIDIA on about 16–17 times forward earnings [S18]; deVere’s Nigel Green warned that indiscriminate selling can hit strong companies unfairly [S19]. Others expect more swings: Kevin Mahn of Hennion & Walsh said “there’s going to be more choppiness ahead” [S14]. Our view: the election effect is real but narrow — it hits companies that depend on new US data-centre construction and power. It would only become a fundamental problem if pledges turn into rules or if the big cloud companies cut their spending plans.

For a full company view see our Micron analysis [S21]; a refreshed Micron report with prices after the sell-off is being prepared.

What to Watch

When	Test	Why it matters
17 Nov 2026 (US)	NVIDIA results and guidance	First read on whether AI demand is intact after the election
From 19 Jan (Texas) and when Ohio’s new governor takes office	Do Texas and Ohio actually pause data-centre approvals?	Turns pledges into facts [S3] [S8]
Next Fed decision	Rate rise or not [S16]	Borrowing costs for data-centre building
Early 2027	Big cloud companies’ 2027 capex plans	The real test of AI demand

Method and Sources

Stock moves are IBKR daily closes (regular trading hours) for 3–5 Nov 2026; index closes are from AP (SOX: Yahoo Finance [S14]). Quotes and claims link to the reports they come from. Figures independently fact-checked against the linked sources on 6 Nov 2026. This is a market note, not a valuation: it has no fair value.

Not located (NOT FOUND): a wire-service SOX close for 4 Nov; Qualcomm’s and Arm’s exact 5 Nov closes from a news source (IBKR used for Qualcomm); final House seat count; any post-election federal bill on data centres or AI; Ohio’s inauguration date.

Analysis only, not a recommendation to buy or sell any security. Figures as at 5 Nov 2026 close; sources linked. The author holds positions in NVDA, AMD and SKHY and does not hold the other stocks named.

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