Last updated 6 November 2026 at 11:30 PKT.
Wall Street suffered its worst day in more than a year on Thursday, 5 November, as a ferocious sell-off in artificial intelligence stocks wiped trillions of dollars from the market and pushed the Nasdaq into correction territory. The Nasdaq Composite fell 5.5%, its deepest one-day drop since the tariff-driven sell-off of April 2025, as investors reassessed what the Democrats' sweeping midterm election victories mean for the AI data-centre boom.
The Dow Jones Industrial Average plunged 1,833 points, or 3.44%, to close at 51,523.06, according to the Associated Press. The S&P 500 fell 4.36% to 7,353.73, its worst day since April 2025, while the Nasdaq Composite tumbled 5.52% to 24,315.00. The Nasdaq 100, made up of the index's biggest names, fell 6.4%, erasing $2.5 trillion in market value in a single session, Reuters reported.
The Nasdaq is now in correction territory, having lost nearly 12% from its record close on 6 October. It was the second straight day of selling in AI stocks and the fifth decline of more than 500 points in the Nasdaq since mid-October, as a trade that had carried markets for much of the year comes under increasing scrutiny.
Chips led the fall
The damage was concentrated exactly where the AI boom lives: semiconductors, memory and the companies building data centres. The Philadelphia Semiconductor Index fell 12%, its second-biggest drop on record, touching its lowest level in more than six months, according to Reuters.
Memory-chip maker SanDisk fell 22%. Micron Technology, Advanced Micro Devices and Marvell each dropped 17%, and Nvidia — the company most associated with the AI boom — fell 9%. The so-called neocloud companies, which rent out AI computing power and have borrowed heavily to expand, were hit hard: CoreWeave slumped 10% and Nebius dropped 15%. Data-centre operators Applied Digital, Cipher Digital and IREN each tumbled more than 14%.
Even the hyperscalers, which had defied Wednesday's AI sell-off, joined the slide. Amazon and Alphabet each fell 2.2%, and Microsoft declined 3.6%. All 11 sectors of the S&P 500 finished lower, with technology down 7.3%. The VIX index of expected price swings posted its largest increase since December 2024, and Bitcoin fell 6% to about $75,000, Reuters reported.
Why investors sold
The trigger, according to Reuters, was the Democrats' sweeping victory in this week's US midterm elections, which gave the party control of both houses of Congress. Investors fear that increased political scrutiny and local opposition could slow the construction of new data centres — the physical backbone of the AI boom — and force a reckoning for smaller firms whose ability to raise funds has already been limited by higher interest rates and tighter financial conditions. Analysts at UBS estimated that around 30% of expected US data-centre capacity additions in 2028 could be at risk from potential construction pauses.
"The big election outcome was, especially with the Democrats winning a lot of the governorships, that the slowdown of the data centre buildout is the real key theme that's going to stick."
The quote is from Michael O'Rourke, chief market strategist at JonesTrading, speaking to Reuters.
The political jitters are hitting an AI trade already on shaky footing. Analysts and portfolio managers told Reuters that worries about the return on investment for the enormous sums being poured into AI infrastructure had been building for weeks.
"The market's moving from the promise of AI to the price of AI. There's no question that AI is going to be transformative for the world in the long run. But that doesn't mean every AI-related stock is currently priced appropriately. There's going to be a lot of turmoil."
That was Ted Parkhill, founder and CEO of Incline Investment Management, speaking to Reuters.
Context: the sell-off reversed the previous session's post-election rally in a single day. Wednesday's gains — the Dow rose 1,569 points — were more than erased on Thursday. The Nasdaq had set its record close on 6 October, only a month before the rout, after a year in which AI-related stocks drove much of the market's advance.
Trump blames Democrats
US President Donald Trump described the decline as one of the worst days in stock market history and blamed the Democrats, according to ET Now. Markets also repriced the outlook for interest rates: traders pushed back the expected timing of the Federal Reserve's next rate hike to March, Reuters reported, and are now pricing in only about 40 basis points of tightening in total.
The sell-off spreads to Asia
The rout did not stop at Wall Street. South Korea's KOSPI index closed Thursday down 5.28% at 5,383.80, with Samsung Electronics falling 7.57% and SK hynix tumbling 9.46% as foreign investors sold a net 3.4 trillion won of shares, according to AJU Press. Japan's Nikkei fell 1.8% on Thursday, Reuters reported.
On Friday morning, the selling intensified in Seoul. The KOSPI plunged more than 8% within minutes of the open, falling below the 5,000 mark and triggering a circuit breaker at around 9:03 a.m. local time that halted trading for 20 minutes, according to Asia Today and AJU Press. Samsung fell about 10% and SK hynix about 12% in early trading.
| Index / stock | Thursday's move | What it means |
|---|---|---|
| Nasdaq Composite | −5.5% to 24,315.00 | Worst day since April 2025; in correction |
| Nasdaq 100 | −6.4% | $2.5tn in value erased in one session |
| S&P 500 | −4.36% to 7,353.73 | Worst day since April 2025 |
| Dow Jones | −3.44% to 51,523.06 | Down 1,833 points |
| Philadelphia Semiconductor Index | −12% | Second-biggest fall on record |
| KOSPI (South Korea) | −5.28% to 5,383.80 | Then −8%+ at Friday's open; trading halted |
What is unverified: the scale of any future slowdown in data-centre construction is an analyst estimate, not a confirmed fact. UBS's estimate that about 30% of expected 2028 US capacity additions could be at risk assumes construction pauses that have not been announced. Claims about how Democrats in Congress will use their new majorities are market speculation at this stage. No major AI company announced a cancelled product, a lost customer, or a broken business on 5 November.
Frequently asked questions
Why did AI stocks fall after an election?
Investors fear the Democrats' midterm sweep will bring tighter scrutiny of AI data-centre construction, including local opposition over power and water use and delays in permitting. Data-centre expansion has been the engine of the AI trade, so anything that threatens it hits chipmakers, memory companies and data-centre operators hardest.
Does the sell-off mean AI itself is failing?
No. The sell-off reflects doubts about valuations and financing, not about the technology. As Ted Parkhill put it to Reuters, the market is moving "from the promise of AI to the price of AI" — questioning whether every AI-related stock is priced appropriately, not whether AI will be transformative.
What to watch next
Investors will be watching Friday's US October employment report — economists expect a net rise of about 65,000 in non-farm payrolls and an unchanged unemployment rate of 4.2% — along with remarks from Federal Reserve officials, including New York Fed President John Williams. Analysts also wondered whether the scale of the wipeout could affect the timing of Anthropic's blockbuster initial public offering, expected this autumn, Reuters reported.
Key takeaways
- The Nasdaq fell 5.5% on Thursday, its worst day since April 2025, wiping $2.5 trillion off the Nasdaq 100's value.
- Chip and memory stocks led the fall: the Philadelphia Semiconductor Index dropped 12%, SanDisk fell 22%, and Nvidia fell 9%.
- Investors fear the Democrats' midterm sweep will slow the AI data-centre build-out through tighter scrutiny and permitting delays.
- The Nasdaq is now in correction territory, down nearly 12% from its record close on 6 October.
- The sell-off spread to Asia: South Korea's KOSPI fell 5.28% on Thursday, then plunged more than 8% at Friday's open, triggering a trading halt.
- Rate traders pushed the expected timing of the Fed's next hike back to March.
The AI trade has now suffered its worst day in more than a year, and the question markets face is whether Thursday was a turning point or a violent reset. As Truist's Keith Lerner told Reuters, tech now looks oversold and should rebound — but "the market has to find a floor first."
