Nasdaq Suffers Sharpest Daily Decline Since April 2025

US technology stocks experienced a significant selloff on Thursday as concerns about artificial intelligence investment and the future of data-center expansion intensified following the Democratic Party’s sweeping midterm victory.

The Nasdaq Composite dropped 5.5%, marking its deepest one-day decline since April 2025. The Nasdaq 100 fell 6.4%, erasing approximately $2.5 trillion in market value.

The broader Nasdaq Composite has now lost nearly 12% from its record closing high on October 6, placing the index firmly in correction territory. A correction is generally defined as a decline of at least 10% from a recent peak.

Thursday marked the second consecutive session of selling in AI-related shares and the fifth time since mid-October that the Nasdaq Composite had declined by more than 500 points.

The scale of the decline reflects a growing reassessment of the technology sector’s investment outlook after months of strong performance in AI-linked equities.

Democratic Election Gains Raise Data-Center Concerns

Investors are increasingly concerned that Democratic gains in Congress could lead to greater scrutiny of AI infrastructure projects and potentially slow the construction of new data centers.

Michael O’Rourke, chief market strategist at JonesTrading, identified the potential slowdown in data-center development as a major theme emerging from the election results.

The concerns extend beyond federal policy. Analysts have highlighted the possibility of increased local opposition to data centers because of their demands on electricity grids and water resources.

Bruce Zaro of Granite Wealth Management noted that community resistance could complicate the permitting process for projects that have not yet received approval.

UBS analysts estimated that approximately 30% of expected US data-center capacity additions in 2028 could be at risk from potential construction pauses.

Such delays could affect an industry whose expansion depends on rapidly developing the facilities required to support AI computing demand.

Semiconductor Stocks Lead the Decline

Chipmakers and companies connected to AI infrastructure recorded some of Thursday’s steepest losses.

The Philadelphia Semiconductor Index fell 12%, touching its lowest level in more than six months. Nvidia declined 9%, while Advanced Micro Devices dropped 17%.

The weakness also extended to major technology companies that had previously shown greater resilience during the AI selloff. Amazon and Alphabet each fell 2.2%, while Microsoft declined 3.6%.

The VIX volatility index, commonly known as Wall Street’s fear gauge, recorded its largest increase since December 2024.

The declines demonstrate how concerns about AI investment returns and infrastructure development are spreading across different segments of the technology market.

Financing Risks Hit Neocloud Companies

Companies specializing in AI computing infrastructure faced particularly strong selling pressure as investors reassessed their financing requirements and exposure to higher borrowing costs.

CoreWeave shares fell 10%, while its five-year credit default swap spreads widened to a record 1,267.9 basis points, according to S&P Global Market Intelligence. These spreads reflect market pricing of credit risk and expectations surrounding potential default.

Intel’s five-year credit default swap spreads also reached a record 149.7 basis points.

Nebius declined 15%, while shares of both CoreWeave and Nebius had fallen by half or more since the Nasdaq Composite reached its October 6 record.

The pressure also affected data-center operators Applied Digital, Cipher Digital and IREN, each of which dropped more than 14%.

The market reaction reflects concerns that companies dependent on substantial external financing could face greater difficulty sustaining their expansion plans.

AI Infrastructure Weakness Spreads to Utilities and Suppliers

The selloff extended beyond technology companies to businesses supplying the infrastructure needed for data-center development.

GE Vernova declined 7.4%, while Constellation Energy fell 2.5%, highlighting the broader market exposure of utilities and equipment providers to the AI infrastructure investment cycle.

Microsoft also fell 3.6% following a Bloomberg News report that the company was tightening oversight of certain data-center projects involving Nebius, IREN and Nscale.

The developments add to uncertainty surrounding the pace of infrastructure construction and the financial commitments required to support future AI capacity.

What Investors Should Watch Next

The market’s focus is increasingly shifting from the long-term potential of artificial intelligence to the financial cost and commercial returns of building the infrastructure behind it.

Investors will be watching whether political scrutiny translates into actual construction delays, particularly for projects requiring additional permits. Financing conditions will also remain important for neocloud operators and other companies with substantial capital requirements.

The performance of semiconductor manufacturers, data-center operators and infrastructure suppliers may continue to reflect changing expectations around AI investment. The ability of companies to demonstrate sustainable returns, secure financing and maintain project timelines will be central to restoring confidence in the sector.