Nasdaq Plunges Into Correction as AI Chip Stocks Crash After Midterms

The Nasdaq Composite plunged into correction territory on Thursday, November 5, 2026, as chip and AI infrastructure stocks crashed for a second day on fears that the Democratic midterm sweep will slow the data center buildout. By about 10:53 a.m. ET, Yahoo Finance showed the Nasdaq down 5.7% at 24,278, the S&P 500 down 3.8% at 7,397 and the Dow down about 1,345 points, or 2.5%, wiping out much of Wednesday’s 1,500-point post-election rally. The PHLX Semiconductor Index was down about 11.7%. This is a developing story written while markets are open, so every number here is an intraday reading with its time, not a close. The full blow-by-blow is on CNBC’s live updates.

TLDR

Thursday’s selloff is concentrated almost entirely in the AI trade: chipmakers, memory makers, neoclouds and the Musk companies are down 7% to 17%, while consumer staples, healthcare and utilities are up. The trigger is the midterm result, which investors read as more regulation and local moratoriums on data centers, plus a weak Qualcomm outlook and memory-chip news. But the slide started weeks ago: the semiconductor ETF SOXX was already down more than 23% in a month, and 29 big chip stocks had lost about $3.8 trillion since Nvidia’s October 6 record. The Nasdaq is now more than 10% below its record close of 27,599.89, while the average stock is holding up far better than the indexes suggest.

Thoughts

The headline numbers describe a crash, but the market underneath is closer to a split. The Nasdaq is down nearly 6% and the semiconductor index nearly 12%, yet the Russell 2000 is down only about 2%, and CNBC reports consumer staples up more than 1%, with healthcare and utilities higher and Chevron and Johnson & Johnson gaining. The reason the big indexes look so bad is concentration: technology is 37% of the S&P 500 by market value, according to CNBC. Over the past month the Dow rose 4.1% and the equal-weight S&P 500 rose more than 5% while SOXX fell more than 23%. On Wednesday, Yahoo Finance reports, 76% of S&P 500 stocks beat the index, the best breadth in Bank of America’s data back to 1986, and the equal-weight index beat the regular one by the widest margin since April 2009. For anyone whose savings sit in an S&P 500 or Nasdaq fund, that is the real lesson of the day. An index fund is diversified across 500 companies, but its weight is not. When a third of it is one trade, it moves like that trade.

The two-day whiplash shows how markets digest politics, one link of the supply chain at a time. On Wednesday the Dow jumped more than 1,500 points, its best day since April 2025, and the giant cloud companies rallied on the idea that tougher rules entrench the incumbents. On Thursday traders followed the same logic further down the stack. If data centers become slower and costlier to build, the companies that sell into the buildout sell less of it. The estimates of how much is at stake differ by measure: Wells Fargo puts 27% of planned US data center gigawatts in Texas, where governor-elect Gina Hinojosa wants a moratorium. Goldman Sachs analysts say short-term moratoria could affect about 45% of planned US capacity expansion. Reuters reports that UBS sees about 30% of expected 2028 capacity additions at risk. Those are different numbers measuring different things, but they all point the same way. Goldman’s traders summed up the mood: “building will become more expensive, complicated and slower.”

The tell that this is a repricing and not a reaction to bad news is that good results are being sold too. AMD fell about 14% after reporting third-quarter revenue of $13.38 billion, up 45% from a year earlier, with its data center business nearly doubling. Investing.com called it a sector-wide repricing rather than an AMD-specific event. Qualcomm actually beat fourth-quarter estimates. It is down double digits because its handset revenue fell 26% to $5.1 billion against $5.3 billion expected, according to Yahoo Finance, and its earnings guidance came in light. When investors sell a company that grew 45%, they are not reacting to the quarter. They are lowering what they are willing to pay for the next five years. Goldman’s traders described exactly that: “Multiples have compressed enormously, positioning was already derisked and another aggressive wave of selling followed.”

The hardest-hit names say where the risk really sits: with the builders that borrowed. Neocloud CoreWeave was down 12%, Nebius 17% and IREN 15% in CNBC’s midmorning tally, and data center operators IREN, Hut 8 and Applied Digital were already down 6% to 11% within half an hour of the open, per Reuters. These are companies that took on heavy debt and long leases on the assumption that demand would keep compounding and permits would keep flowing. A hyperscaler can absorb a slower Texas. A company whose only business is renting out GPUs in Texas cannot. Investors had already started worrying in October that AI companies were borrowing too much to fund their plans, and a political shock to the permitting pipeline lands hardest on exactly those balance sheets.

Some perspective is useful. Reuters says this would be the Nasdaq’s second correction this year, after one in March that took it about 10.7% below its high. Corrections in a long bull market are common, and none of today’s numbers are closes yet. What is new is that the AI trade, which carried the market for years, now has a political risk that cannot be modelled from earnings calls. The next tests come quickly: October payrolls on Friday morning, with economists expecting a gain of about 59,000, a Federal Reserve that held rates at 3.75% to 4% on October 28 with two officials voting for a hike, and traders who, according to Reuters, expect a hike next month. BTIG’s Jonathan Krinsky put it plainly: “broad market risk has not been eliminated.” The sensible response for most people is the boring one: know how much of your portfolio is really one bet, and decide whether you are comfortable with that before the next day like this, not during it.

Key Takeaways

At about 10:53 a.m. ET on Nov. 5, Yahoo Finance showed the Nasdaq down 5.67% at 24,278.19, the S&P 500 down 3.80% at 7,396.69 and the Dow down 1,344.69 points (2.52%) at 52,011.43.
The Nasdaq is in correction territory, more than 10% below its Oct. 6 record close of 27,599.89. A correction is formally confirmed on a close.
The PHLX Semiconductor Index fell about 9% in the first hour and roughly 11.7% by late morning. Yahoo Finance estimated about $2 trillion in chip market value erased in the morning.
Big decliners at midmorning included AMD (about 14%), Micron (12% or more), Qualcomm (double digits), Nvidia and Broadcom (7% each), Oracle (close to 5%), and Tesla and SpaceX (9% each).
Neoclouds fell hardest of all: CoreWeave about 12%, Nebius 17% and IREN 15%, per CNBC.
Defensive sectors rose: consumer staples gained more than 1%, and healthcare and utilities were higher. The Russell 2000 fell only about 2%.
Investors fear that Democratic control of Congress and key governorships means more regulation and local moratoriums on data centers. Goldman estimates moratoria could touch about 45% of planned US capacity expansion.
Wells Fargo estimates Texas holds 27% of planned US data center gigawatts, Georgia 7%, and Ohio and Pennsylvania 5% each. Its strategist Ohsung Kwon had called a Democratic win in Texas a possible “left-tail event” for the AI trade.
Qualcomm beat fourth-quarter estimates but its handset revenue fell 26% to $5.1 billion against $5.3 billion expected, and its earnings outlook came in light.
The slide began well before the election: SOXX fell more than 23% in a month, and Yahoo calculates 29 major chip stocks lost about $3.8 trillion between Oct. 6 and Wednesday, including about $940 billion from Nvidia.
Asia led the rout overnight: South Korea’s Kospi fell 5.28% to 5,383.8. Bitcoin fell below $77,000, and oil rebounded, with Brent near $97 after an 8.7% drop on Wednesday.
Next catalysts: October payrolls Friday at 8:30 a.m. ET (consensus about +59,000) and the Fed’s December meeting, where traders expect a rate hike.

Detailed Summary

How the Morning Unfolded

Stocks opened mixed, with the Dow up about 334 points and the Nasdaq already lower, after Wednesday’s rally. The selling in chips spread quickly. By 9:57 a.m., Reuters had the Nasdaq down 3.09% and the semiconductor index down 7.1%. By 10:47 a.m., CNBC had the Nasdaq down 4.7%, the S&P 500 down 3.1% and the Dow down 1,018 points. Minutes later Yahoo Finance’s ticker showed the Nasdaq down 5.67% and the Dow down about 1,345 points, erasing most of Wednesday’s gain.

The Midterm Trigger

Democrats won both chambers of Congress on November 3 and took governorships in Texas and Ohio on platforms critical of data centers, while voters rejected data centers in 40 of 41 local ballot measures. CNBC says investors fear that combination could “spell more regulation” of the AI buildout. Swissquote’s Ipek Ozkardeskaya told Reuters the two years of push from the Trump administration for AI buildout might now be scaled back. Yorkville’s Dan Ives wrote that hyperscaler capex should still exceed $1 trillion in 2027, but that growth into 2028 will “clearly moderate significantly as the data center buildout comes at a much slower pace.”

Chips: Qualcomm, Micron and AMD

Qualcomm’s report overnight set the tone for chips, with its handset business falling short and its earnings guidance below expectations. Micron fell after Bloomberg reported it had all but halted construction of a fab in Taoyuan, Taiwan, amid a labor dispute, according to reporting on the move. AMD dropped despite strong growth. Nvidia and Broadcom each fell about 7%, and memory and storage names such as Sandisk fell by double digits. Arm also slid after a weak royalty outlook.

Neoclouds, Power and the Musk Companies

The most leveraged AI infrastructure names fell hardest: CoreWeave, Nebius, IREN, Hut 8 and Applied Digital. Utilities and equipment suppliers tied to the data center boom, including GE Vernova and Constellation Energy, also fell, according to Reuters. Tesla and SpaceX each dropped about 9%, as Ives warned that a proposed merger of the two now faces “a much tougher regulatory roadmap” after Democrats won in Texas and in Washington.

The Rotation Into Everything Else

CNBC’s Fred Imbert argues the month-long rotation out of tech would normally be healthy, but with tech at 37% of the S&P 500 it is now a risk at the index level. Barclays strategist Venu Krishna wrote that concerns about the sustainability of the AI infrastructure supercycle triggered a sell-off in tech, “prompting a rotation into areas with limited AI exposure.” Staples, healthcare, utilities and stocks like Chevron and Johnson & Johnson rose on Thursday, and BofA’s Savita Subramanian called Wednesday’s breadth historic.

The October Backdrop

This leg follows a brutal October for AI stocks. Alphabet lost about $500 billion in market value on October 29, Intel fell 29% the next day on supply problems and a memory crunch, and investors have been asking for clearer evidence that data center spending will pay off. OpenAI cut the target for its latest funding round, and Anthropic’s IPO is competing for the same capital. Microsoft said some third-party capacity deliveries it expected were delayed, leaving its quarterly capex below plan.

Rates, Oil, Gold and Crypto

The bond market was calm compared with stocks, with the 10-year Treasury yield near 4.87% and little changed. Oil rebounded after Wednesday’s 8% plunge on hopes for an Iran deal, with Brent back near $97. Gold rose about 1% to around $4,110 an ounce. Bitcoin fell below $77,000, more than 5% lower on the day, as the stock selloff spread to crypto. The VIX volatility index jumped more than 40% to about 24.

Overseas Markets

The chip rout started in Asia. South Korea’s Kospi fell 5.28% to 5,383.8, the worst in the region, and chip equipment and memory names in Japan and Korea fell sharply. Hong Kong went the other way, rising about 3.7%, after China’s central bank cut a key relending rate. The split mirrored the US: AI hardware sold, almost everything else held.

Notable Quotes

“Legislative restrictions are difficult to quantify … but building will become more expensive, complicated and slower.”
Goldman Sachs traders, on the Democratic sweep, via CNBC

“Multiples have compressed enormously, positioning was already derisked and another aggressive wave of selling followed.”
Goldman Sachs traders, on why the selling kept coming

“A shakeout among the most speculative parts of the theme is underway.”
MRB Partners, in a Thursday note quoted by CNBC

“We suspect there is going to be some scrutiny on this aggressive AI buildout.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, to Reuters

“Concerns about the sustainability of the AI infrastructure supercycle recently triggered a sharp sell-off in Tech and other stocks tied to the AI narrative, prompting a rotation into areas with limited AI exposure.”
Venu Krishna, Barclays strategist

“We will believe a SpaceX/Tesla merger happens but now faces a much tougher regulatory roadmap to get this deal done in 2027 given this new political blue roadmap in DC/Texas.”
Dan Ives, Yorkville, on why Tesla and SpaceX fell

“Ultimately this factor volatility is unlikely to go quietly into the night … broad market risk has not been eliminated.”
Jonathan Krinsky, BTIG chief market technician

For the argument that the tech rotation has become a risk to the whole market, read CNBC’s full analysis here. For the political backdrop, see our post on how voters rejected data centers in 40 of 41 ballot measures.