Business · Markets · 45 mins ago
Nasdaq plunges as investors question AI and data center spending
US technology stocks fell sharply on Thursday, with the Nasdaq down 5.5% and major chipmakers among the hardest hit.
The selloff followed Democrats’ midterm election gains, which investors feared could bring tighter limits on data center construction.
Data centers power AI services, but their expansion requires huge spending on buildings, equipment, electricity and water.
Investors are questioning whether AI spending will pay off, especially as borrowing costs rise and some companies face large infrastructure bills.
Local opposition to data centers also adds uncertainty for companies planning new facilities.
The Nasdaq’s decline erased trillions of dollars in market value, and the index entered correction territory after falling more than 10% from its October peak.
The market’s next direction depends partly on AI demand and data center plans, but the sources give no specific next step.
US technology stocks fell sharply on Thursday as investors worried that election results could slow the artificial-intelligence and data-center buildout.
The Nasdaq fell by different reported measures: Le Monde said it dropped as much as 5.3%, CNBC reported a 5.5% decline, and Hindu BusinessLine said the Nasdaq 100 fell more than 6%.
Chipmakers and other companies tied to AI infrastructure were among the hardest hit.
Investors also faced concerns about high capital needs, rising interest rates and weaker-than-expected company results.
The articles link the selloff to both election-related policy concerns and doubts about the durability of AI-related spending.
- Who
- US technology companies and investors, particularly those tied to AI infrastructure, were affected.
- What
- Technology stocks sold off sharply as investors questioned the pace and sustainability of AI and data-center investment.
- When
- Thursday, November 5.
- Where
- Wall Street, in the United States.
- Why
- Investors worried that election results could bring a political shift that slows data-center construction and AI spending; some also pointed to company results and rising interest rates.
This story does not have two clearly opposing sides.
Voters in the US midterm elections delivered a victory for Democrats, according to the articles.
Stocks initially rose as investors reacted to the election results and reduced political uncertainty.
US technology shares fell sharply, with AI-linked stocks and chipmakers among the hardest hit.
- Nasdaq
- Le Monde reported a fall of as much as 5.3%; CNBC reported a 5.5% drop.
- Nasdaq 100
- Fell more than 6% on Thursday, according to Hindu BusinessLine.
- Nvidia
- Fell more than 9%, according to Hindu BusinessLine and CNBC.
- Semiconductor shares
- A closely watched index of semiconductor shares dropped 12%, according to Hindu BusinessLine.
- Data centers
- Ballotpedia counted 41 local measures in 10 states on data-center construction; voters opposed restrictions in all but one measure, according to CNBC.
22 sources
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What people are saying
It’s so focused on one theme and the unwind of that theme. I think it’s something that needed to happen as we have too much focus on AI and it became too big a part of the market.
You have these earnings forecasts for next year that make these stocks look like they have low PEs. But if you are having this policy change, that’s a structural shift in what the environment is going to be for the data center build out. The forecasts are no longer valid.
The technology is still going to continue on in terms of its development, but if there is a slowdown in the actual development and the buildings and the infrastructure and so forth, that's what stocks are going to trade off.