Technology and artificial intelligence stocks plunged on Thursday, Nov. 5, as investors reassessed the cost of building AI infrastructure and the prospect of tighter limits on data centers after Democratic election victories. The Nasdaq Composite fell as much as 5.5% during the session.
The sell-off extended across the US market. The S&P 500 closed down 4.4%, while the Dow Jones Industrial Average lost more than 3.4%, according to The Associated Press.
Chipmakers were among the hardest hit. Nvidia shares dropped more than 9%, while AMD and Micron each fell by more than 17%, and Intel declined 10.3%. The Philadelphia Semiconductor Index, which tracks 30 major semiconductor companies, fell more than 12%, according to the BBC.
Tesla shares also fell nearly 11%. The sharp losses came as investors considered whether data center construction could slow and whether the large sums being invested in AI will produce the returns markets expect.
Election results add to data center concerns
Democratic candidates campaigned in several states on measures to slow or restrict data center development. The facilities power AI services but have also become a focus of local and state-level political debate. In Texas, governor-elect Gina Hinojosa campaigned against data centers and pledged a moratorium on new construction in the sector.
Some technology leaders said the industry had underestimated the strength of opposition. OpenAI president and co-founder Greg Brockman told the Wall Street Journal Tech conference in California that companies need to engage directly with communities where they plan to build infrastructure.
Meta president Dina Powell McCormick said the industry needed to do more to explain the case for AI. The market decline also reflects wider investor concern that AI-related shares may have risen too far, as companies continue to spend heavily on data centers and computing capacity.
Reid Bentley