Breaking: Musk's $300B Loss and the Magnificent Seven's $1T Crash

Elon Musk's companies suffered a severe financial blow on Thursday as Tesla and SpaceX lost more than $300 billion in combined market value. Tesla shares fell nearly 11 percent while SpaceX dropped 8 percent. This decline was part of a broader rout that saw the so-called Magnificent Seven technology companies shed about $1 trillion in value in the single trading day. The loss for the tech giants marked one of the worst days for the sector in recent memory, erasing the gains that had been made on Wednesday.

The market turmoil coincided with a difficult week for Musk, who had spent nearly $450 million backing Republican campaigns across the country. This included at least $45 million in support of Ken Paxton for the Texas Senate seat. However, the Texas Senate bet failed as the state went to the Democrats on Tuesday night. The political shift has left Musk's financial interests exposed to new legislative pressures, particularly regarding the infrastructure needed for his companies to expand.

The selling pressure was not limited to Musk's holdings but spread across the entire technology sector. The Nasdaq Composite fell 5.5 percent, marking its worst day in 18 months. The index closed more than 11 percent below the record it set last month, which places it in correction territory. An estimated $2.5 trillion in market value was wiped from the Nasdaq Composite. The S&P 500 also fell 4.3 percent, its worst day since April 2025, when President Trump announced sweeping global tariffs.

Investors are reacting to the Democrats' sweep of the House and Senate in Tuesday's midterm elections. Democrats campaigned on slowing the spread of data centers and AI, and there were dozens of measures on ballots around the country aimed at restricting data center development. Voters rejected data centers in a series of local ballots, signaling a shift in public sentiment. In Texas, Democrat Gina Hinojosa won the race for governor after campaigning on an immediate moratorium on new data center construction.

The fear is that tighter state-level restrictions could slow data center construction, pressuring companies tied to the artificial intelligence trade. This comes on top of broader concern that the huge sums being spent on AI will not pay off and that AI shares may be in a bubble. The catalyst for the crash was the anticipation that the Democrats' success could restrain the White House and the tech industry. Neil Wilson, an investor strategist at Saxo UK, said a complete capitulation-level event was playing out in tech stocks, noting that the fear is a total momentum unwind as Democrats pace the frontier and kibosh data center buildout.

The Philadelphia Semiconductor Index, which tracks 30 of the largest chip companies, fell more than 12 percent. It has fallen more than 30 percent since the beginning of October and is almost 40 percent below its peak in June. Nvidia fell 9.2 percent, the biggest faller in the Dow, losing more than $400 billion in market value. SanDisk fell more than 22 percent, while Western Digital fell 17 percent. AMD and Micron each fell more than 17 percent, and Intel fell 10.3 percent.

Wall Street's fear gauge, the Cboe Volatility Index, jumped as much as 5.7 points to above 28 about 90 minutes after the opening bell. This was its highest reading since March 31, 2026, the day after the S&P 500 bottomed during the Iran war tensions. The VIX was up 61 percent on the day. By midday nearly 800,000 VIX call options had traded, 3.5 times the 30-day average. Noel Smith, an options trader, said his data says to de-risk, but his gut says this is a blowout that could create a dip-buying opportunity.

Analysts suggest the market is moving from the promise of AI to the price of AI. Ted Parkhill, founder and chief executive of Incline Investment Management, stated that while AI is going to be transformative for the world in the long run, that does not mean every AI-related stock is currently priced appropriately. He predicted there is going to be a lot of turmoil. Susannah Streeter, chief investment strategist at Wealth Club, noted that fresh panic over the AI trade has hit Wall Street hard, with fears that the vast sums poured into AI infrastructure may not deliver the returns investors have been banking on.

The Dow Jones Industrial Average fell more than 1,800 points on Thursday, a drop of 3.4 percent, to 51,868. It erased the gains made on Wednesday, when Wall Street had its biggest daily gain in months. After that rally, President Trump wrote on Truth Social that the stock market just hit another record high, less than two years into his term. He added that your 401(k)s are through the roof and it is record setting all.

The 10-year Treasury yield fell to 4.83 percent, its lowest since September, as investors bought bonds as a haven. In London, the FTSE 100 closed down 46 points, or 0.4 percent, at 10,782.66, after an early rally in Europe fizzled. Gene Goldman, chief investment officer at Cetera Financial Group, said the sell-off had become exaggerated as selling accelerated through the day and predicted a recovery. He stated that when you have a correction in a bull market they are typically short lived, and that it is ugly right now but they do think they will see a bounce back soon.