Shares of technology companies plunged after disappointing earnings from Qualcomm and Arm Holdings.
The rout in artificial-intelligence companies wiped out $2.5 trillion in market value from the Nasdaq, the largest loss in the index's history.
Qualcomm's shares plunged despite projecting torrid growth in data-center demand after the chip maker said higher memory component prices weighed on its handset unit.
Arm Holdings shares slid after the designer of chip architecture forecast earnings growth that was not as robust as some analysts had anticipated.
Shares of Nvidia, the posterchild for the AI boom, registered one of their biggest losses in recent years.
"The narrative has shifted from 'AI changes everything' to the 'Blue wave means datacenters will never be built again in this country," said Chris Zaccarelli, chief investment officer for money manager Northlight Asset Management.
The PHLX "SOX" Semiconductor sector index fell by more than 10% for its biggest loss since the depths of the pandemic. Memory chip makers such as Micron and Sandisk, favorites of day traders during the AI boom, went into freefall.
Chip equipment maker Lam Research dropped by the largest increment since 2020.
The Federal Trade Commission and 22 states updated their complaint against Amazon, revealing allegations that the tech company deceptively inflated prices in its online search advertising auction.
Separately, Amazon and Uber formed a restaurant delivery partnership to counter growing competitive pressure across the delivery industry.
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