US stocks lost about $2.5 trillion in market value within the first hour of trading on Thursday. A heavy selloff in chip and artificial intelligence companies pushed the Nasdaq into correction territory and dragged the cryptocurrency market down with it.

Market estimates show the losses briefly approached $3 trillion at the session low before a partial rebound narrowed the damage. The S&P 500 slid as much as 3.8 percent to around 7,394 points, erasing Wednesday’s rally, while the Nasdaq fell to more than 10 percent below the record close it set last month.

The Philadelphia Semiconductor Index dropped more than 11 percent, its steepest fall since March 2020, according to market reports.

Chipmakers took the worst of it. AMD and Micron fell by more than 15 percent at points during the session, and SanDisk lost over 20 percent. Nvidia shed roughly $400 billion in value, turning negative for the year, while Qualcomm slumped after its latest quarterly results.

Traders linked the rout to the midterm elections. Investors dumped AI hardware and data centre stocks after Democratic victories raised fears of tighter regulation and a slowdown in data centre construction.

Goldman Sachs had estimated that a Democratic win could put 45 percent of planned US data centre capacity at risk, and some Democratic lawmakers have called for curbs, including a ban on artificial superintelligence. Doubts over AI spending were already weighing on tech shares, with the Nasdaq 100 losing about $2 trillion in October.

Crypto followed the stocks down. Bitcoin fell about 5 percent from above $80,000 to near $76,000, its weakest level since the start of the week, as forced selling hit leveraged traders. The total crypto market lost roughly $150 billion, with more than $1 billion in positions liquidated over 24 hours, according to CoinGlass data. Ether and Solana each fell by more than 6 percent.

Goldman Sachs noted that hedge funds were selling the big tech stocks they had bought during Wednesday’s rally, while long term investors stayed on the sidelines. Whether the selloff deepens or steadies will depend on how markets read the incoming Congress’s plans for AI.