US Stocks Fall Sharply as Investors Reassess AI Data Center Outlook After Midterms
The Nasdaq dropped about 5.5 percent and the S&P 500 fell 4.4 percent on November 5-6, erasing trillions in value amid concerns that Democratic control of Congress could slow artificial intelligence infrastructure expansion.
New York2 min read
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US equity markets recorded one of their largest single-day declines in more than a year on November 5-6, as investors reacted to the Democratic victories in the midterm elections and the implications for artificial intelligence data center construction. The Nasdaq Composite fell approximately 5.5 percent, while the S&P 500 dropped 4.4 percent. The Dow Jones Industrial Average declined more than 1,800 points.
Technology and semiconductor shares led the losses. Nvidia fell roughly 9 percent, AMD more than 15 percent, and Micron and Broadcom also posted double-digit declines. The Philadelphia Semiconductor Index dropped more than 12 percent. The sell-off erased an estimated $2.3 trillion to $3.7 trillion in market value across major indices, according to various calculations. The Cboe Volatility Index rose sharply.
The decline reversed an initial post-election rally. Investors had first treated the clear results as removing uncertainty. By the following session, attention shifted to Democratic candidates who had campaigned against rapid data center expansion and to local ballot measures in multiple states that supported restrictions. Texas, the largest data center market, elected a Democratic governor who had criticized the buildout. Analysts noted that a Democratic Congress and Democratic state executives could slow permitting, impose additional regulation, or alter incentives for large power and computing facilities.
AI-related companies have accounted for a large share of recent market gains and of the S&P 500's market capitalization. Eight of the largest AI-exposed firms represented more than one-third of the index at the end of October. A slower pace of data center construction would affect capital expenditure plans, chip demand, and projected revenue timelines for cloud and model developers.
Asian markets followed lower on Friday, with Japan's Nikkei and Taiwan's index among those declining. US futures showed some recovery early Friday. President Trump posted that the market drop was tied to the election results and Democratic policies. Market participants described the move as a repricing of the speed and scale of the AI infrastructure build rather than a rejection of the technology itself.
The session marked the largest decline since the April 2025 tariff-related drop. Whether the pressure continues will depend on the specific legislative and regulatory steps the new Congress takes once it convenes in January, and on any state-level actions that alter the economics of new data centers.
