Nasdaq Plunges 5% Into Correction as the AI Trade Unravels

The Nasdaq Composite plunged as much as 5.5% on Thursday, November 5, 2026, falling into correction territory as investors dumped chip and data-center stocks after Democrats swept the midterm elections. The drop puts the index more than 10% below its October 6 record close, on pace for its worst day in five months, and it erases Wednesday's historic post-election rally in a single morning.

What happened

By 11:05 a.m. Eastern, the Nasdaq Composite was down 1,370 points, or 5.32%, at 24,366.28, according to Yahoo Finance data reported by multiple outlets. The S&P 500 was down 3.50% at 7,419.52, and the Dow Jones Industrial Average had fallen 1,238 points, or 2.32%, to 52,117.55. Just a day earlier, the Dow had surged 1,569 points — its best post-midterm day since 1982 — and the Nasdaq had gained 1.44%. Thursday reversed all of that and more.

The selling was led by semiconductors. The Philadelphia Semiconductor Index plunged more than 9% to its lowest level since mid-April, and the iShares Semiconductor ETF (SOXX) fell about 11%. SanDisk dropped roughly 20%, Micron and AMD fell around 15%, and Nvidia lost about 8% to 9%. Qualcomm fell 13% to 14% after its earnings beat was overshadowed by a miss in smartphone chip sales and soft guidance. Data-center names were hit just as hard: CoreWeave fell about 14%, Nebius about 17%, and IREN about 19%. Tesla and SpaceX were each down around 10%.

Why it's blowing up

The trigger is Washington. Democrats flipped dozens of seats to win control of both the House and the Senate on Tuesday, and investors are now pricing in tougher rules for the massive data-center buildout behind the AI boom. Data centers appeared on the ballot in 41 communities across 12 states this week, and in nearly every case voters chose to restrict or ban them. In Texas, a major hub for planned data centers, Democrat Gina Hinojosa won the governor's race after campaigning for stronger restrictions, including a proposed moratorium.

The rhetoric added fuel. Representative Yassamin Ansari of Arizona posted on Wednesday that the top of the Democratic agenda should be "a pause on advanced AI development, regulation of this out of control industry, and a ban on artificial superintelligence." UBS analysts have estimated that around 30% of expected U.S. data-center capacity additions in 2028 could be at risk from possible construction pauses. Layered on top are older worries that never went away: big technology companies are borrowing heavily to fund data centers and chips, and investors are questioning how quickly that spending turns into profit.

Not everything fell. AppLovin, which reported record third-quarter revenue on Wednesday, surged more than 30% on Thursday, and defensive consumer names held up far better than technology — a sign this was a targeted exit from the AI trade rather than a blanket sell-off of every stock.

Key facts

• Nasdaq Composite: down as much as 5.5% Thursday morning; more than 10% below its October 6 record close of 27,599.89 — the definition of a correction.
• One-day reversal: Wednesday's Dow gain of 1,569 points (+3.03%) was its best post-midterm day since 1982; by Thursday late morning the Dow was down more than 1,200 points.
• Chips led the rout: the Philadelphia Semiconductor Index fell more than 9%; SanDisk fell about 20%, Micron and AMD about 15%, Qualcomm 13% to 14%.
• Data-center stocks: CoreWeave down about 14%, Nebius about 17%, IREN about 19% in late-morning trading.
• The catalyst: a Democratic sweep of Congress, local votes restricting data centers in 41 communities, and growing doubts about AI spending returns.

Sources: CNN, Realtor.com, TradingKey, MarketWatch, JBiz News (Yahoo Finance and CNBC data).

What's next

Thursday's close matters. If the Nasdaq Composite finishes more than 10% below its October 6 record, the correction is confirmed on a closing basis, not just intraday. Investors will also watch whether proposed data-center restrictions move from campaign talk to actual bills, and whether chip companies cut guidance in coming weeks. This index has been on a rollercoaster all year — it closed in correction in March, hit record highs in June, nearly corrected again in July, and set fresh records in September and October. Whether this drop is a sharp one-day reset or the start of a longer unwind in AI stocks is the open question, and no election result automatically cancels projects already under way.

FAQ

Why did the Nasdaq fall 5% on November 5, 2026?

Investors sold chip and data-center stocks after Democrats swept the midterms, fearing tougher rules could slow the AI data-center buildout, while doubts about AI spending returns and Qualcomm's weak outlook added pressure.

Is the Nasdaq in a correction?

Yes, intraday on Thursday it traded more than 10% below its October 6 record close of 27,599.89, which is the standard definition of a correction; a close at that level would confirm it.

Which stocks fell the most?

Semiconductors and data-center names led: SanDisk fell about 20%, IREN about 19%, Nebius about 17%, Micron and AMD about 15%, and Qualcomm 13% to 14%.

Did every stock fall?

No. AppLovin surged more than 30% after record earnings, and defensive consumer stocks held up far better than technology shares.