Stock market plunge: AI fears and the midterm elections sink tech stocks

NBC News reports a sharp market sell-off on Thursday, November 5, 2026. The tech-heavy Nasdaq 100 fell 6.3%, wiping out $2.3 trillion in market value. The S&P 500 sank 4.4%, a loss of $2.8 trillion. Both indexes posted their worst session since April 2025, when President Trump's global tariffs rattled markets. The broader Nasdaq Composite fell more than 5.5% and entered “correction” territory, meaning a decline of at least 10%.

According to the article, existing fears about the durability of the AI boom were compounded by a wave of Democratic victories in the midterm elections, with AI-critical candidates elected from Maine to Alaska. Markets had broadly expected Democrats to win majorities in Congress, but not the scale of the result or upset wins such as Gina Hinojosa's as governor-elect of Texas, the country's largest data center market. Hundreds of candidates who pledged to rein in AI data centers have been elected, opening the door to tighter regulation of a sector that is the main engine of US economic growth. Texas, Ohio, Michigan and Georgia are of particular concern given their weight in this type of infrastructure.

The immediate trigger was a pair of lackluster earnings reports from major chipmakers Qualcomm and Arm Holdings, released Wednesday evening. Arm fell 13% and Qualcomm 9.5%. The Philadelphia Semiconductor Index plunged 12.3%, its worst day since March 2020. The “DRAM” ETF, which tracks memory makers, lost nearly 18%. SanDisk dropped 22%; Micron, Western Digital and AMD, 17%; and Seagate, 16%. Nvidia fell 9.2%, its biggest daily drop since April 2025, and was the largest contributor to the Dow Jones' 1,833-point (3.4%) decline; its shares are down 15% over three months. Alphabet, Meta, Amazon and Microsoft also fell, though less than the broader market, while data center suppliers Cisco and Caterpillar dropped around 6%.

Elon Musk's companies, SpaceX and Tesla, each fell about 10%, largely because of the election results, although both are involved in AI development and SpaceX recently debuted as a data center developer. On paper, they have lost more than $400 billion since the election. The article notes that Musk spent hundreds of millions backing Republican candidates and could now face stricter regulation and even state and federal investigations.

The sell-off spread to Asia. South Korea's Kospi fell as much as 8% at the open, triggering a temporary trading halt; Samsung closed down 6.3% and SK Hynix more than 10%. The Nikkei 225 lost 6% and Taiwan's TAIEX, home to TSMC, 4.5%. Outside equities, Brent crude rose 3.8% and US crude 2.7%, while Treasury yields edged lower and traders scaled back bets on a Federal Reserve rate hike at its December 8-9 meeting, putting the odds at around 60%.

Trump blamed the plunge on Democrats on Truth Social, saying the stock market had suffered “one of the worst days in history” and that Americans' 401(k)s had lost value. Among analysts, Ed Yardeni of Yardeni Research said he does not believe this is an AI bubble bursting, but rather a bubble “losing air very quickly,” which in his view reduces the likelihood of a burst with adverse consequences for the economy and the financial system. According to the article, the Nasdaq Composite remains more than 30% above its level on Election Day 2024. In the background, doubts about whether AI will deliver the productivity needed to justify the enormous investments have been mounting for months.