Nasdaq Falls 5.5 Percent as AI Stocks Sell Off After Midterm Results

The Nasdaq Composite fell 5.5 percent on November 5, 2026, its largest single-day decline since the April 2025 tariff-driven sell-off, and closed more than 10 percent below its October high, placing the index in correction territory.

Technology and semiconductor shares led the losses. Nvidia declined approximately 9 percent. Advanced Micro Devices fell 17 percent. Broadcom dropped about 10 percent. The Philadelphia Semiconductor Index lost roughly 12 percent. Suppliers of data-center equipment also fell sharply: Coherent down 13 percent, Ciena down 15 percent, Comfort Systems down 11.6 percent, and Dell down 15 percent. The broader S&P 500 closed more than 4 percent lower.

The decline reversed gains from the previous session, when the Dow rose more than 1,500 points and the Nasdaq gained 1.44 percent after the midterm results. Investors focused on Democratic victories in the House and Senate and on state-level outcomes that included support for measures restricting data-center construction. Several newly elected Democratic governors in states that host significant AI infrastructure projects have signaled pauses or reviews of new facilities.

The sell-off extended to software companies that had risen with the AI investment cycle, including Palantir and CrowdStrike, both down nearly 10 percent. Market participants cited the risk that a Democratic Congress and state governments will slow the pace of data-center permitting and power approvals. Many of the constraints under discussion apply primarily to new projects and do not immediately affect facilities already under construction.

The Nasdaq is now roughly 12 percent below its October 6 record. The drop erased an estimated $2.5 trillion in market capitalization across the technology sector. Semiconductor and equipment stocks had been among the strongest performers earlier in the year on expectations of continued spending on AI training and inference capacity. The midterm results introduced a concrete political variable into those expectations.

Analysts noted that curbing an investment cycle of this scale is difficult even if political conditions change. Existing power contracts, construction pipelines, and long-lead equipment orders limit how quickly spending can slow. At the same time, the market reaction shows that equity valuations had priced in continued rapid expansion. The one-day move was larger than most single-session declines outside of the 2025 tariff episode.

No major technology company issued a revised capital-expenditure guidance statement on November 5. Several executives had previously described data-center demand as constrained by power availability rather than by demand. The election outcomes add a regulatory layer to that constraint in some jurisdictions. Trading volume on the Nasdaq was elevated, consistent with a broad reassessment rather than a single-name event.

The correction places the index more than 10 percent below its recent peak for the first time in months. Whether the decline continues will depend on the specific legislative proposals that emerge in the new Congress and on any state-level actions that alter permitting timelines. For now, the market has marked down the probability of uninterrupted AI infrastructure growth.