Nasdaq slides into correction as AI spending fears wipe $2.5 trillion
The Nasdaq Composite fell about 5.5% on Thursday and more than 10% from its October record, confirming a correction as investors questioned returns on massive AI infrastructure spending and the prospect of tighter US data-centre rules.
The tech-heavy Nasdaq Composite slumped about 5.5% on Thursday, 5 November — roughly $2.5 trillion in market value — and closed more than 10% below its 6 October record of 27,599.89, putting the index in correction territory, Reuters reported.
Why stocks sold off
- Investors reassessed how quickly huge AI data-centre and chip investments will pay off, after mixed signals from hyperscalers Alphabet and Meta last month.
- Democratic midterm gains raised expectations of stricter scrutiny of AI infrastructure; Texas Democratic Governor-elect Gina Hinojosa said the state will introduce new laws to protect communities from further data-centre buildout, Reuters noted on Friday.
- The Philadelphia semiconductor index fell about 12%, its second-biggest drop on record, with SanDisk, Micron, AMD and Marvell among the hardest hit, according to Reuters’ Trading Day wrap. Nvidia fell about 9%.
Broader market
The S&P 500 lost about 4.4% and the Dow about 3.4%, wiping some $3 trillion from S&P 500 firms. Bitcoin fell about 6% to around $75,000. US 10-year Treasury yields dropped as investors sought safety.
What comes next
Nasdaq futures pointed higher on Friday as traders hoped for a bounce, but strategists warned that questions about AI capital spending and regulation remain. “We may be oversold in the short term, but the underlying questions and causes can’t simply be wiped away,” Interactive Brokers’ Steve Sosnick told Reuters.
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