The artificial intelligence trade suffered its sharpest reversal of the year on Thursday, November 5, as investors reassessed what this week’s midterm elections mean for the data center buildout that has powered the boom. The Nasdaq Composite fell 5.52 percent to close at 24,315, its worst session since April 2025, and finished firmly in correction territory, down as much as 14 percent from its all-time high reached only a month ago. Reuters estimated that some 2 trillion dollars was wiped off the Nasdaq’s market value in a single day.
The broader market fell with it. The S&P 500 dropped 4.36 percent and the Dow Jones Industrial Average lost 1,833 points, or 3.44 percent. All 11 sectors of the S&P 500 declined, and technology fell 7.3 percent. The selling more than erased Wednesday’s rally, when markets had initially reacted calmly to the election results.
Chip stocks took the heaviest damage. The Philadelphia Semiconductor Index plunged about 12 percent, which Reuters described as its second-biggest one-day fall on record. Nvidia fell about 9 percent, closing at 181.60 dollars and shedding roughly 447 billion dollars in market value. AMD and Micron Technology each fell about 17 percent, Marvell fell by a similar amount, and SanDisk dropped about 22 percent. Data center operators were hit hard as well, with Applied Digital, IREN and Nebius each falling more than 14 percent.
The pattern of the losses tells the story. The companies that supply the buildout fell two to four times as much as the companies that buy their hardware. Meta, one of the largest spenders on AI infrastructure, fell only about 4 percent, while Amazon and Alphabet also declined by smaller amounts than their suppliers. Investors were not abandoning AI demand itself. They were repricing how quickly that demand can turn into finished data centers, and on what terms.
That repricing followed the Democrats’ sweeping wins in the midterms. Reuters reported that investors fear Democrats, now in control of both houses of Congress, will slow the data center buildout, and JonesTrading analyst Michael O’Rourke told Reuters that the lasting theme of the election is “the slowdown of the data center buildout,” pointing to Democratic wins in governorship races. UBS analysts estimated that around 30 percent of the United States data center capacity expected to be added in 2028 could face delays.
The anxiety did not begin on Thursday. The Nasdaq-100 had already entered a correction earlier in the week as investors grew wary of Big Tech’s AI spending and saw little evidence of adequate returns, and local fights over electricity, water and noise had turned data centers into a campaign issue in several states.
The shock spread overseas on Friday morning. In Seoul, the KOSPI index fell more than 8 percent shortly after the open, triggering a 20-minute trading halt, while Japan’s Nikkei 225 fell about 6 percent, as Asian chip and memory makers followed their American counterparts lower.
Whether Thursday marks a turning point or a flush will depend on evidence that has not arrived yet. Nvidia reports results on November 17, and its comments on supply, power and customer timing should show whether orders are actually slipping or only schedules are being questioned. Until then, the market has delivered a clear message: the AI story is now judged as much on permits, power and delivery dates as on chips and models.
Photo: The Nasdaq MarketSite in Times Square, New York. Photograph by Ajay Suresh, via Wikimedia Commons, licensed under CC BY 2.0.