U.S. tech stocks sold off hard on November 5. The Nasdaq 100 shed roughly $2.5 trillion in market value.
Investors were concerned that the Democrats’ strong midterm results could put the brakes on AI expansion, particularly plans to build large data centers.
The Nasdaq Composite dropped 5.5% in its worst session since April 2025. The Nasdaq 100 fell 6.4%, while the S&P 500 lost 4.4%, and the Dow was down 3.4%. By the close, the Nasdaq Composite stood nearly 12% below its record high from October 6.
AI infrastructure stocks took the biggest hits. Nvidia fell 9%, and AMD dropped 17%. The Philadelphia Semiconductor Index declined about 12%, its worst day in more than six years. Neocloud companies that rent out computing power also sold off, with Nebius down roughly 15% and CoreWeave falling about 10%.
Democrats’ gains gave the party control of both chambers of Congress, adding to uncertainty around the future of AI projects. Investors are looking at what closer oversight could mean for companies planning major data center projects. These facilities require large investments, reliable power supplies and large amounts of land.
They are also facing resistance from local communities, with concerns ranging from electricity and water use to the impact on nearby residents. Further restrictions could leave some developers with little choice but to put projects on hold or scale them back.
UBS estimates that around 30% of the planned additions to U.S. data center capacity in 2028 could be at risk. Any slowdown would hit not only data center operators but also chipmakers, equipment suppliers and companies that provide power and other infrastructure.
The drop also reflects growing doubts about whether the large sums being spent on AI will deliver adequate returns. Higher borrowing costs have already put pressure on smaller infrastructure firms that build or rent computing capacity. The sell-off pushed the VIX, Wall Street’s main volatility gauge, to its largest one-day increase since December 2024. All 11 sectors of the S&P 500 finished lower.
The unease is also reaching private markets. Major investors are questioning whether Anthropic can still proceed with its planned IPO at the expected $1.5 trillion valuation after the market rout, according to people familiar with the matter.
Some believe the figure may need to come down closer to $1 trillion. One investor also questioned whether the company might delay the offering. Anthropic had been aiming to list the week before Thanksgiving and raise as much as $100 billion.
