Nasdaq slides into correction as AI sell-off wipes trillions from US stocks

Wall Street suffered its worst session since April 2025 on Thursday, November 5. An AI and chip sell-off wiped out the post-election rally and pushed the Nasdaq into a correction — Wall Street’s term for a fall of more than 10 percent from a recent high.

The numbers were stark. The Dow Jones Industrial Average fell 1,833.06 points, or 3.44 percent, to 51,523.06. The S&P 500 dropped 4.36 percent to 7,353.73. The Nasdaq Composite lost 5.52 percent to 24,315, closing 11.9 percent below its October 6 record. The Nasdaq-100 sank 6.36 percent. All 11 S&P 500 sectors ended lower. More than $2.5 trillion in market capitalisation was wiped out in 24 hours, and the S&P 500 alone lost around $3 trillion in value, according to market reporting of the day.

Nvidia, the chipmaker at the centre of the AI boom, fell about 9.3 percent. The Philadelphia Semiconductor Index plunged more than 12 percent. Semiconductor names were the hardest hit across the board: shares of Sandisk, Micron and Western Digital lost 17 to 22 percent on November 5, and the iShares Semiconductor ETF fell 12.1 percent — its second-worst day in history after a 15 percent decline in the early days of Covid.

What triggered it

The sell-off followed the Democrats’ sweeping victory in the US midterm elections on Tuesday, November 3. Investors worried that a Democratic Congress would slow the development of data centres and artificial intelligence, through tighter regulation and greater scrutiny of the infrastructure build-out that has powered the market’s rise.

That concern was not abstract. Data-centre and AI-related stocks have fuelled the bull market over the past few years, and opposition to them has grown in step with affordability concerns — the cost of power, land and water for ever-larger data centres, and the question of who benefits from them. The election results made the risk of tighter regulation over AI development feel more real, and the market repriced accordingly.

There was also a company-specific trigger. Disappointing results from Intel, the former semiconductor giant, signalled a slowdown in demand, and that set off the collapse in chip stocks. But the scale of the fall — the Nasdaq’s biggest one-day points loss on record, and its worst session since April 2025 — was about more than one company’s earnings. It was about a market asking, all at once, whether the AI trade had run too far, too fast.

The correction in context

A correction, in market language, is a fall of 10 percent or more from a recent peak. The Nasdaq entered one on November 5, closing 11.9 percent below its October 6 record. The Nasdaq-100’s 6.4 percent fall was its worst single-day return since a 12.2 percent fall in March 2020, in the early days of Covid, and its market-cap decline of $2.2 trillion on the day was its worst ever. Since its 52-week high on October 6, the index has given up gains of more than $5.2 trillion.

The longer view is more sobering still. Since their peaks, Nvidia has lost 25 percent of its value, Micron has dropped 55 percent, and Intel’s share price has fallen by a factor of 2.6. The semiconductor index has lost one-third of its value since its June peak. CoreWeave, the heavily indebted data-centre builder, has seen its market capitalisation shrink by more than two-thirds, and Oracle’s value has been cut in half. Google is down 30 percent from its peak, Amazon 10 percent. Microsoft has held up, with its share price near record highs.

Wall Street’s fear gauge, the CBOE Volatility Index, or VIX, jumped 70 percent on November 5 — the third-highest jump in history, after the “Volmageddon” episode of February 2018 and a 74 percent jump in December 2024. Friday’s session ended with a slight rebound, but the sudden drop served as a reminder of the fragility of the sector’s growth and profitability expectations.

The fall spread beyond the United States

Asia took the brunt the following day. Tokyo’s Nikkei 225 fell more than 6 percent at the open and trimmed losses to 5.7 percent. South Korea fared worse: the Kospi dropped 8.55 percent early, triggering a circuit breaker, and later traded 7.4 percent lower. European shares started strongly, then reversed once Wall Street opened. The pan-European Stoxx 600 closed 0.38 percent lower, and the FTSE 100 closed 0.43 percent lower at 10,782.66.

The Bank of England raised its Bank Rate by 25 basis points to 4 percent on the same day — its first increase since August 2023 — adding a further twist to a week in which markets were already unsettled.

What happens next

A correction does not mean the end of the AI trade, and several analysts made that point in the days after the sell-off. But it may signal that the trend is evolving. The questions now are about cost of capital, profitability, and viability: whether the enormous spending on AI infrastructure will generate the returns that justify it, and whether regulation will slow the build-out. Those questions were present before November 5. The midterm results, and the market’s reaction to them, made them impossible to ignore.

November 5, 2026, is likely to remain a notable day in market history, given the intensity of the correction and the rising friction around the AI theme. Whether it is remembered as the day the bubble burst, or as a sharp correction inside a longer boom, will depend on what the next few weeks bring.