Nasdaq sheds $2.5 trillion in AI selloff after Democratic sweep stokes data center fears

NEW YORK, Nov 6 – Investors rushed to sell technology stocks on Thursday, and by the market’s close, the Nasdaq had fallen 5.5 percent, its worst day since April of last year.

Most of the selling was in stocks tied to artificial intelligence. Traders said they were worried about what the results of Tuesday’s elections would mean for the industry, now that Democrats will control Congress and many more of the country’s governor’s offices.

The concern centers on data centers—the massive facilities packed with computer chips that AI companies rely on to operate. They consume enormous amounts of power and water, and many residents oppose having one built near their homes.

Investors now believe it will become harder to win approval for such projects, and some fear that construction on many of them could be halted.

By the end of the day, the largest companies on the Nasdaq had collectively lost about $2.5 trillion in value, the biggest one-day decline since President Donald Trump announced his tariffs in April 2025.

It was also the second consecutive difficult day for AI stocks. Since peaking in early October, the Nasdaq has fallen nearly 12 percent, a decline deep enough for traders to describe as a correction.

A strategist at a trading firm in Connecticut said he thinks the slowdown in data center building is the part of the election that will stay with the market. He said the wins for Democrats in governor’s races were a big reason for that.

Chipmakers fell the most. An index of chip stocks dropped 12 percent, to its lowest level in more than six months, and Nvidia, the biggest maker of AI chips, lost 9 percent.

Smaller firms that rent out computing power for AI fared even worse, and so did the companies that build and run the data centers. Some of them lost more than a seventh of their value in one session.

The biggest names were not spared. Amazon, Alphabet, and Microsoft all closed lower, as did several power and equipment companies that supply the industry.

A wealth manager in Massachusetts said people will push back against data centers that place strain on local power grids and water supplies. He noted that many projects are still awaiting permits and that the road ahead for them looks difficult.

That view is widely shared across the market. On Tuesday, voters in at least 10 states considered local measures related to data centers, according to Ballotpedia. In a Reuters/Ipsos poll conducted this year, most Americans said they were concerned that data centers would drive up their electricity bills.

Analysts at the Swiss bank UBS estimate that nearly a third of the new data center capacity planned in the United States for 2028 could be at risk if construction is paused.

The election came at a bad time for the sector. Investors had already been asking for weeks whether the vast sums being spent on AI would ever earn a return. Higher interest rates since the summer had also made it harder for the smaller AI firms to raise money.

Some of those firms have now lost at least half their value since early October. For one of the best-known, CoreWeave, the cost of insuring its debt against a default rose to a record on Thursday.

A fund manager said the market has started to look at AI in a new way. “The market’s moving from the promise of AI to the price of AI,” he said.

He said he still expects AI to change the world over time. But in his view, not every AI stock is worth its current price, and he expects a lot of turmoil before things settle down.

Many analysts said they expect the selling to go on for a while. Stocks in Japan and South Korea, which had both had a strong year, had already fallen sharply after Wednesday’s losses.

Some also said the rout could affect the timing of the planned stock market debut of the AI company Anthropic, which had been expected this fall.