AI Stocks Split After the Midterms:Chips Fell, Big Tech Held

AI stocks after the midterms did not move as one group. From the Election Day close on November 3 to Friday's close on November 6, Amazon ($AMZN) rose 3.43%, Microsoft ($MSFT) 1.85% and Alphabet ($GOOGL) 1.70%. Meta Platforms ($META) was the exception among the four biggest AI spenders, down 1.75%.

Over the same three sessions, all six companies whose sales depend on that spending fell. The declines ran from 7.20% at AMD ($AMD) to 19.31% at Micron Technology ($MU). The PHLX Semiconductor Index, which tracks 30 chip companies and is often called the chip index, fell 11.42%, against 2.54% for the S&P 500 and 4.22% for the Nasdaq-100.

The first group, called the spenders here, are hyperscalers: companies that run very large cloud data centers. The second group, the suppliers, are Nvidia ($NVDA), AMD, Broadcom ($AVGO), Micron Technology, Lam Research ($LRCX) and Applied Materials ($AMAT). They sell the chips, memory and chipmaking machines those data centers are built with.

Three questions follow from that split: how it unfolded day by day, what ties the two groups together, and what the election did and did not change in law.

The Week in Three Sessions

The three sessions after Election Day each looked different. Wednesday split the two groups, Thursday pulled almost everything down, and Friday brought a partial rebound that was larger for the suppliers.

Wednesday, November 4

In the first session after Election Day, the S&P 500 rose 1.58%, from 7,568.92 to 7,688.62, while the chip index fell 3.13%, from 10,600.40 to 10,268.65. The broad market and the chip stocks went in opposite directions on the same day.

The spenders accounted for much of the gain. Microsoft rose 6.68% to its highest close of 2026 and Amazon 6.12%, with Alphabet up 3.18% and Meta 1.44%.

Five of the six suppliers fell, from 2.00% at Broadcom to 7.00% at Micron Technology. AMD rose 1.01%. It had released AMD's third-quarter results after the close on November 3, so its Wednesday move followed its own report.

Thursday, November 5

Thursday was the broadest decline of the week. Every one of the ten stocks fell, and so did every index in the table: the S&P 500 by 4.36%, the Nasdaq-100 by 6.36%, the Nasdaq Composite by 5.52% and the chip index by 12.25%.

The suppliers fell hardest. Micron Technology lost 17.46%, AMD 17.26% and Lam Research 16.36%, followed by Applied Materials at 13.58%, Broadcom at 10.43% and Nvidia at 9.26%. The spenders fell less, between 2.19% at Amazon and 3.96% at Meta.

Measured on daily closes since January 2000, the size of those moves stands out. The S&P 500 had not fallen this much in a day since April 4, 2025. The Nasdaq-100 and the chip index had not fallen this much since March 16, 2020, and the chip index drop was its second largest since 2000.

Is the Nasdaq in a Correction?

A correction is a fall of at least 10% from a recent high. The Nasdaq Composite met that definition on Thursday: its close of 24,315.00 was 11.90% below its October 6 close of 27,599.79, its highest close of 2026. After Friday's partial recovery, it stood 10.94% below that high.

Friday, November 6

Friday reversed part of Thursday's move, and the reversal was uneven. The chip index rose 4.21% to 9,390.25, with AMD up 11.04% and Lam Research up 8.23%, while the S&P 500 added 0.31% to 7,376.86 and the Nasdaq-100 1.35%.

All six suppliers rose, from 0.74% at Broadcom to 11.04% at AMD. Among the spenders, Meta rose 0.84% and Alphabet 0.78%, while Amazon slipped 0.35% and Microsoft 0.99%. The week did not run in one direction.

The Split Since Election Day: Spenders vs. Suppliers

Why are chip stocks down? Measured from the Election Day close, the chip index was 11.42% lower by Friday and all six suppliers were down between 7.20% and 19.31%, while three of the four largest AI spenders were higher. That decline came on top of a slide that had begun on October 6.

Counting the two sessions before the vote, from the October 30 close, the gap is wider. Amazon finished that week up 7.88% and Micron Technology down 22.01%.

The Spenders

Amazon gained the most of the four, finishing 3.43% above its Election Day close. Microsoft gave back part of its Wednesday gain on Thursday and Friday but still ended 1.85% higher, and Alphabet ended 1.70% higher.

Meta was the only spender lower over the three sessions, down 1.75%. Its Thursday decline of 3.96% was the largest in the group that day.

The Suppliers

Micron Technology, which makes memory chips (chips that store data), fell the most, by 19.31%. The two semiconductor equipment makers, companies that sell the machines used to make chips, came next: Lam Research fell 13.12% and Applied Materials 12.88%.

Broadcom fell 11.57% and Nvidia 9.70%. AMD fell 7.20%, the smallest decline in the group, after its 11.04% rebound on Friday.

Why the Two Groups Are Tied Together: Big Tech Capex

Capital expenditures, or capex, are the money a company spends on long-lived assets such as buildings, servers and chips. For the spenders, a large share of that money goes into data centers.

Data center spending pays for servers, chips, memory and the machines that make chips. Those are the products the suppliers sell, which is why the two groups are usually discussed as one AI trade: the spenders' capex is the suppliers' revenue.

What the Four Companies Spent in the Third Quarter

In the quarter ended September 30, 2026, the four spenders' purchases of property and equipment totaled $201.923 billion. That was up 107.59% from $97.271 billion a year earlier, an increase of $104.652 billion.

These are cash purchases taken from each company's cash flow statement. Microsoft labels the line additions to property and equipment, and its quarter is fiscal first-quarter 2027.

Companies also define capex differently. Meta's own capex measure, which includes principal payments on finance leases, was $34.91 billion for the quarter.

What Amazon and Meta Expect for 2026

Two of the four releases include a full-year spending outlook.

"

We continue to expect 2026 cash capital expenditures to be approximately $220 billion.

— Amazon (Q3 2026 earnings release)

"

We anticipate 2026 capital expenditures, including principal payments on finance leases, to be in the range of $135-145 billion, narrowed from our prior outlook of $130-145 billion.

— Meta Platforms (Q3 2026 earnings release)

Both figures are the companies' own expectations, and actual spending can differ from them.

What the Spending Did to Cash Flow

Free cash flow is, broadly, the cash a business generates from its operations after paying for capex. Amazon's release says trailing-twelve-month free cash flow “decreased to an outflow of $42.4 billion”, compared with an inflow of $14.8 billion a year earlier.

The release attributes the change primarily to higher purchases of property and equipment, which it says “primarily reflects investments in artificial intelligence”.

At Alphabet, third-quarter operating cash flow was $42.290 billion and purchases of property and equipment were $51.355 billion. The difference was negative $9.065 billion for the quarter.

On the other side of that spending, AMD's third-quarter Data Center revenue was $8.546 billion, up 97% from a year earlier. It is one example of supplier revenue tied to data center demand.

What the Election Changed and What It Did Not

Democrats won majorities in both the House and the Senate in the November 3, 2026 midterm elections, according to network projections. The new Congress convenes on January 3, 2027. No federal data center law has been passed.

How a Federal Bill Becomes Law

A federal bill becomes law only if both chambers pass it and the president signs it, or if two-thirds of both chambers vote to override a veto. The members elected on November 3 take their seats when the new Congress convenes.

The Federal Moratorium Proposal

A moratorium is a temporary legal halt. On March 25, 2026, Senator Bernie Sanders (I-Vt.) and Representative Alexandria Ocasio-Cortez (D-N.Y.) announced the Artificial Intelligence (AI) Data Center Moratorium Act, which would halt new AI data center construction nationwide until federal safeguards are in place.

After the election, Sanders posted on X:

"

National data center moratorium now.

— Bernie Sanders (Post on X after the November 3, 2026 midterm elections)

State and Local Actions

Several state and local steps were on the record before or on Election Day. Each applies only where it was taken, not nationally.

Ballotpedia counted 41 local data center ballot measures in 10 states on Election Day. In every measure except one, in Harwood, North Dakota, voters sided against data centers.

In Texas, Governor-elect Gina Hinojosa said in an October 22 campaign video posted on X that, as governor, she would put a moratorium on data center approvals until the Legislature passes protections into state law. That is a campaign pledge, not an enacted measure.

Earlier in the year, New York Governor Kathy Hochul ordered a pause of up to one year on state permits for large new data centers. In August, Pennsylvania Governor Josh Shapiro signed an executive order setting new requirements for data center development.

Two Ways to Read the Week

The same tables support two different readings of the week. Each is set out below with the numbers behind it.

One Reading: A Slower Build-Out

One way to read the week is that the split matches what a slower data center build-out would mean for each side. If construction slows, the spenders spend less of their cash, while the suppliers have less to deliver.

The spenders' cash flow is part of that picture. Amazon's twelve-month free cash flow is already an outflow of $42.4 billion, and Alphabet's purchases of property and equipment exceeded its operating cash flow by $9.065 billion in the quarter.

The first post-election session fits that pattern: the spenders rose between 1.44% and 6.68% while five of the six suppliers fell. The moratorium calls and the local votes are on the record.

Another Reading: A Slide Already Underway

Another reading is that the week extended a slide that started before the vote and, on Thursday, hit everything in both groups. From October 6 to the Election Day close, the chip index had already fallen 19.80%, and Alphabet and Meta had fallen 19.46% and 15.95%.

On November 5, every stock in both groups fell and the S&P 500 had its largest one-day drop since April 4, 2025. On Friday, the suppliers rebounded more than the spenders.

No federal law has changed. The new Congress is not seated until January 3, 2027.

What Would Help Tell the Readings Apart

Three kinds of new information bear on the two readings:

• Spending plans. A spender's next release either changes its capex expectations or leaves them in place, and that is direct evidence on the build-out.
• Supplier reports. Applied Materials and Nvidia both report this month, and their own statements on data center demand come from the supplier side.
• Legal steps. Only an enacted law, a signed executive order or a local vote changes the rules where it applies. Proposals and campaign pledges do not.

The Slide That Began Before the Vote

Chip stocks were already falling in October, the subject of our October 18 look at the chip slide. Election week came after a month of declines, not after a run to new highs.

October 6 to Election Day

October 6 was the highest close of 2026 for the S&P 500, the Nasdaq-100, Nvidia and AMD. From that close to Election Day, the chip index fell 19.80%, the Nasdaq-100 9.75% and the S&P 500 3.20%.

The two semiconductor equipment makers fell furthest: Lam Research by 30.90% and Applied Materials by 27.98%. AMD fell 25.49%, Micron Technology 18.22%, Nvidia 13.61% and Broadcom 11.62%.

The spenders were already split. Alphabet fell 19.46% and Meta 15.95%, while Microsoft fell 1.57% and Amazon 2.19%.

Measured from October 6 to Friday, Lam Research was down 39.97% and the chip index 28.96%. Amazon was up 1.17% and Microsoft 0.25%.

Where the Year Stands

Even after the slide, several suppliers are well above their year-end 2025 levels. Micron Technology is up 141.76% for the year and AMD 109.68%, against 32.57% for the chip index and 7.76% for the S&P 500.

Nvidia is roughly flat for the year, up 0.08%. Broadcom, Alphabet and Meta are lower, by 15.14%, 9.02% and 7.57%. Past performance does not guarantee future results.

Dates to Watch

These dates are set by the companies themselves or by law.

Applied Materials and Nvidia are two of the six suppliers in the tables above. Their reports will be the first full results from that group since the week of the midterms.