$2.5 trillion wiped off Nasdaq 100 as U.S. midterm outcome adds to AI stock slump

Global technology stocks tumbled on fears that the massive infrastructure investments underpinning the artificial intelligence (AI) boom may take longer to build, finance and monetise, even as Indian equities bucked the worldwide sell-off with a sharp rally on November 6.

The sell-off, fuelled by concerns over mounting AI-related capital expenditure and uncertain returns, gathered momentum following the U.S. midterm election results. Democrats’ victories have heightened the prospect of tighter scrutiny of data-centre projects and possible restrictions on new developments, adding to investor anxiety.

The Nasdaq-100 plunged 6.36% on November 5, erasing approximately $2.53 trillion from its aggregate adjusted market value, according to Nasdaq index data. The Nasdaq Composite fell 5.52%, while the S&P 500 and Dow Jones Industrial Average declined 4.36% and 3.44%, respectively.

Semiconductor stocks bore the brunt, with the Philadelphia Semiconductor Index slumping 12.2%. Nvidia lost about 9%, while AMD and Micron Technology shed more than 17% each.

The weakness spilled over into Asian markets on Friday. South Korea’s KOSPI fell 6.02%, after plunging more than 8% intraday. Japan’s Nikkei 225 declined 5.96%, while Taiwan’s TAIEX lost 4.51%.

Indian equities, however, bucked the trend. The Sensex surged 1,718 points, or 2.17%, to close at 81,028.02, while the Nifty 50 advanced 2.01% to 25,030.35.

Foreign portfolio investors (FPIs) were net buyers of Indian equities worth ₹14,974.68 crore on November 5, against net sales of ₹10,444.54 crore by domestic institutional investors (DIIs), provisional exchange data across the NSE, BSE and MSEI showed.

A Macquarie Research note flagged potential regulatory headwinds for data-centre development following election outcomes in Texas, Georgia and Ohio, where proposals to impose moratoriums or restrictions on new projects could affect the industry.

Greater scrutiny of power connections, backup-generator emissions, water consumption, zoning and taxation could prolong approvals and raise project costs. The impact may be more pronounced for projects in the pipeline than for facilities that have already secured approvals and power capacity.

Macquarie said approved but unleased data-centre capacity could gain value if fresh supply faces delays, benefiting well-capitalised operators with access to power and approved sites. It remained positive on the digital infrastructure sector.

The broader concern is whether chip demand can translate into supplier revenues if data-centre projects are held up by financing constraints, electricity shortages or regulatory hurdles. Capital Market Laboratories analyst Ophir Gottlieb has argued that slower construction could favour cloud companies with existing infrastructure, even as equipment suppliers face order delays.

Yet underlying demand remains robust. AMD’s data-centre revenue surged 97% year-on-year to $8.55 billion in the September quarter. According to a November 5 Huatai Research analysis, the company expects segment revenue to grow about 50% sequentially in the December quarter. AMD also expects overall revenue growth of more than 80% in 2027, with data-centre operations contributing over 80% of total revenue.