Nasdaq loses $2.5 trillion as midterm elections fuel fears over AI infrastructure and data centre construction delays
Tech-heavy Nasdaq saw its largest one-day decline since April 2025, erasing trillions in market value due to concerns over increased AI scrutiny following a Democratic victory in U.S. midterm elections.
The Nasdaq Composite dropped 5.5% over fears that the Democrats’ success could hinder AI infrastructure growth and challenge small firms already facing financial constraints.
This marked the second consecutive day of selling in AI stocks and the Nasdaq Composite’s fifth decline over 500 points since mid-October amidst rising AI market scrutiny.
Major election outcomes suggest a slowdown in data center construction, a theme expected to persist according to JonesTrading’s Michael O’Rourke.
Losing big
The Nasdaq Composite entered correction territory with a nearly 12% loss from its October 6 peak, as earlier reported by Reuters.
Analysts foresee further declines, potentially beginning with Friday’s Asian market sessions, as recent drops followed losses in data center shares.
Some analysts speculate that the market reaction might delay Anthropic’s anticipated IPO, influencing market sentiment further.
Semiconductor and AI infrastructure shares, significant in previous gains, saw declines primarily due to financing concerns and high U.S. interest rates.
Chip-related shares fell sharply, with the Philadelphia SE Semiconductor index down 12%, while Nvidia and Advanced Micro experienced significant drops.
The VIX index, indicating Wall Street’s expected price volatility, had its largest increase since December 2024.
Hyperscalers like Amazon and Alphabet fell 2.2%; the Nasdaq 100 lost $2.5 trillion in value.
Investors consider potential local opposition to data center expansions, with 30% of projected U.S. capacity additions in 2028 facing risks of construction delays.
Growing political uncertainties affect AI investments already unsure of immediate returns despite substantial financial commitments.
CoreWeave’s market anxiety led to a 10% drop, with widening credit default swap spreads indicating increased investor worries.
Nebius fell 15%, highlighting concern as shares for these companies halved since Nasdaq’s October peak.
Data center companies like Applied Digital, Cipher Digital, and IREN saw over 14% losses, alongside declines in utilities and equipment suppliers related to infrastructure projects.
Microsoft shares fell 3.6%, tightening project oversight of companies like Nebius and IREN.
