US financial markets have suffered one of their biggest single-day sell-offs in years, with investors wiping approximately $3.2 trillion off stock market valuations as concerns over the future of artificial intelligence (AI) investment triggered a sharp decline in technology shares.
The sell-off on Thursday, November 5, saw the technology-heavy Nasdaq 100 plunge 6.4 per cent, marking its biggest one-day decline since the COVID-19 pandemic in March 2020. The broader S&P 500 also fell 4.4 per cent, its steepest daily drop since April 2025.
The sharp market reversal followed sweeping victories by Democratic candidates in the United States midterm elections, raising concerns that opposition to large-scale data centre developments could disrupt the infrastructure expansion underpinning the AI investment boom.
According to the Financial Times, investors are concerned that newly elected politicians could introduce restrictions on data centre projects, particularly in states where opposition to their construction has gained political support.
Candidates who campaigned against data centre developments secured important victories in states including Texas, Ohio and Georgia, prompting fears that planned investments in semiconductor chips, servers and computing facilities could face delays or regulatory obstacles.
Charles-Henry Monchau, chief investment officer at Swiss private bank SYZ Group, told the Financial Times that investors were concerned that the AI investment cycle could be approaching its peak.
“With the blue wave, investors fear that peak [AI capital spending] is behind us,” he said.
The pressure extended beyond major technology companies to semiconductor manufacturers, with the Philadelphia Semiconductor Index declining 12.2 per cent during Thursday’s trading session.
A UBS index tracking more than 40 major AI-related companies, including Nvidia, Broadcom and Advanced Micro Devices (AMD), also fell more than 8 per cent, putting it on course for its steepest decline of 2026.
Investor withdrawals further reflected the changing market sentiment. The Financial Times, citing investment research firm Vanda Research, reported that investors had withdrawn a net $382 million from individual stocks during Thursday’s trading.
Jai Malhi, Vanda Research’s senior equity strategist, described retail investors as “heavy sellers” of technology shares, adding that the day’s activity was on course to record the largest amount of retail selling since the late-July market sell-off.
Investors are also becoming more cautious about the cost of expanding data centre capacity and the potential returns from the heavy spending on AI infrastructure.
The sharp decline shows how uncertainty over data centre expansion and AI-related infrastructure spending is beginning to weigh on investor confidence, with political developments adding to concerns about the sector’s growth prospects.
