Tech rout: the Nasdaq enters correction and roughly $2.5 trillion evaporates on fears of an AI build-out slowdown

Global markets fell sharply after a sell-off on Wall Street on Thursday, November 5, 2026, which wiped out roughly $2.5 trillion in market value. According to CNN Business, the trigger was fear that Democratic gains in the midterm elections will slow the expansion of artificial intelligence infrastructure.

The tech-heavy Nasdaq plunged 5.52% and closed in correction territory, more than 10% below its all-time high of October 6. It was the index's worst day since April 2025, when Donald Trump unveiled his global tariffs. The S&P 500 and the Dow Jones also had their worst sessions since then. The Nasdaq 100, a narrower index made up of the big tech companies, fell 6.36%, its worst day since March 2020, at the start of the covid-19 pandemic. Since the October 6 highs, the Nasdaq is down about 12% and the S&P 500 is down close to 6%. The Dow is about 5% below its August 5 peak.

The slump contrasts with Wednesday's historic post-election rally, when the Dow rose 1,569 points and the Nasdaq gained 1.44%. On Thursday the Dow closed 1,833 points lower, erasing all of those gains. Below the surface, shares of semiconductor makers and companies tied to data center construction were already falling on Wednesday, and that pressure intensified on Thursday.

According to the article, a key factor was the Democratic win in the Texas governor's race. Texas is central to AI development, and Google, Meta, Oracle and OpenAI have made massive data center investments there. Governor-elect Gina Hinojosa campaigned for a temporary moratorium on data centers and for ending certain tax incentives for the companies that build them. Investors fear that other Democratic wins in states that are hubs for planned data centers could have similar consequences.

Chip stocks were hit especially hard. Nvidia fell 9.3%, wiping out its gains for the year. A closely watched chipmaker index plunged 12.3%, its worst day in about six and a half years. Tesla and SpaceX fell 11% and 9%, respectively. The "neoclouds" that rent out computing capacity, CoreWeave and Nebius, dropped about 10% and 15%. CoreWeave is down 76% from its June 2025 peak, shortly after its IPO, and Nebius is down 58% from its peak in June of this year. Qualcomm, which missed estimates on Wednesday and blamed part of the damage on higher memory chip costs, fell 9.5%; CNN compares this to Intel's warning the previous week.

The VIX volatility index, Wall Street's "fear gauge," jumped nearly 70%, its biggest one-day rise in almost two years, reaching its highest level in seven months. All eleven S&P 500 sectors closed lower. Bonds served as a safe haven: the 10-year Treasury yield fell to 4.84%, its lowest level in two months.

The shockwave reached Asia: South Korea's Kospi fell nearly 9% at Friday's open, triggering a 20-minute trading halt.

Investor reaction was contradictory. On Wednesday, Amazon, Meta and Google, the so-called hyperscalers, rose on the idea that new restrictions would free up cash that would otherwise go into data centers, improving profitability. On Thursday that reasoning reversed, likely on fears that the restrictions would be a net drag.

The analysts quoted offer differing views. Keith Lerner of Truist Advisory Services sees the week's moves as more of a knee-jerk reaction than a real indicator of how tech will fare under a Democratic Congress, and believes the risk-reward balance is improving for long-term investors, since the sector is sharply underperforming the S&P 500. Ed Yardeni of Yardeni Research even sees an upside: he told CNN that the AI build-out "was too frenzied and speculative" and that it is better to let "air out of the AI bubble" than for it to burst.

The article recalls underlying doubts about whether there is overbuilding, meaning more computing capacity is being committed than demand will ultimately justify. It also expects tech to remain volatile, with Anthropic's upcoming IPO and OpenAI's expected listing next year. The Nasdaq had already closed in correction in March, returned to highs in June, nearly fell into correction in July and set new records in September and October before Thursday's drop.

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