AI Stocks Selloff: Nasdaq Sinks 5.5% Into Correction; Dow Drops 1,833
AI stocks selloff: the Nasdaq fell 5.5% into a correction and the S&P 500 lost 4.4% as midterm results stirred fears of curbs on new data centres.
An AI stocks selloff swept Wall Street on Thursday, 5 November, pushing the Nasdaq composite down 5.5% into correction territory as investors weighed whether Democratic midterm gains could slow data centre construction.
The S&P 500 fell 334.89 points, or 4.4%, to 7,353.73, its worst day since the April 2025 tariff selloff, according to the Associated Press. The Dow Jones Industrial Average dropped 1,833.06 points, or 3.4%, to 51,523.06.
The Nasdaq composite lost 1,421.52 points to close at 24,315.00, leaving it 11.9% below the record high it set last month. The Philadelphia Semiconductor Index fell about 12.2%, its biggest one-day decline since April 2025.
Chipmakers lead the AI stocks selloff
Nvidia fell 9.3%, the AP said. Advanced Micro Devices tumbled 17.3%, Micron Technology dropped about 17.5% and CoreWeave lost 9.8%.
Micron also faced company-specific news, with reports that the memory maker had suspended plans for a $4.5 billion memory chip facility in Taiwan amid a dispute with employees.
The losses spread to power and infrastructure names tied to the AI build-out, with GE Vernova sinking 7.5%. Tesla fell 10.77%, making it one of only two Magnificent Seven stocks, along with Nvidia, to drop more than the broader indexes.
Volatility rose sharply. The Cboe Volatility Index jumped more than 65% to as high as 27.45, its biggest one-day gain in over two years, Yahoo Finance reported.
A few stocks bucked the trend. AppLovin jumped 31% after beating revenue and profit expectations and approving a buyback of up to $3.2 billion, while Tapestry gained 7.1% after raising its forecasts, the AP said.
Midterm results and data centre worries
Analysts linked much of the AI stocks selloff to the midterm outcome. Rising electricity bills have turned data centres into a political issue, and some Democrats have called for limits or pauses on new projects.
Goldman Sachs has estimated that about 45% of planned US data centre capacity sits in states that could pause new projects. That raised timing risks for chip, memory and server suppliers.
Not everyone blamed politics alone. Mark Hackett, chief market strategist at Nationwide, said hedge funds had been selling the sector aggressively for weeks, describing the move as a continuation of investors cutting leverage in semiconductor and cloud infrastructure stocks.
Retail investors also sold. Vanda Research said individual investors had sold a net $358 million of US stocks by 2:58 pm ET, with “no signs of buying the dip,” Yahoo Finance reported.
Interest rates remained part of the backdrop. Borrowing costs have risen this year, and the Federal Reserve held its target range at 3.75%–4% last month, with two officials voting for a hike.
Bonds offered some relief. The 10-year Treasury yield eased to 4.84% from 4.90% late on Wednesday, while Brent crude rose 3.9% to $98.29 a barrel, recovering part of the previous day’s steep drop, the AP said.
India angle and what comes next
The Nasdaq correction came just hours after a strong rally in Indian shares. The Sensex rose 2,008.61 points to 79,310.01 on Thursday, and foreign investors bought nearly ₹15,000 crore of Indian equities on a provisional basis, their largest single-day net purchase since 20 September 2024, Kotak Neo reported.
GIFT Nifty was at 24,473.50, down 126 points, early on Friday, pointing to a cautious start for Indian markets. Elsewhere in Asia, South Korea’s Kospi was down 5.3% and Japan’s Nikkei 225 was 1.8% lower in Friday morning trade.
The rout adds to pressure on chipmakers after AMD’s third-quarter results and the recent plunge in Intel shares. Nvidia ended Thursday down 2.6% for the year, according to the AP.
Wall Street steadied on Friday. The Nasdaq rose 1.09% and the S&P 500 gained 0.31%, while the Dow slipped 0.46%, according to CNBC data cited by Stock Titan. AMD rebounded 11%, Micron gained 5.1% and Nvidia added 2.8%. Friday’s US jobs report showed payrolls rising by a stronger-than-expected 165,000 in October, keeping a December Fed rate hike in play. The heavy AI spending flagged by Meta and other big technology companies remains central to the debate over how quickly the data centre build-out can continue. Oil traders, meanwhile, are watching for any sign of an end to the Iran conflict.
