A brutal sell-off for AI stocks sends Wall Street reeling, and the S&P 500 tumbles 4.4%

A devastating sell-off gripped Wall Street on Thursday, November 5, as stocks linked to AI data centre development experienced a major decline. This devastating loss wiped out all of the previous day's gains, which had been the stock market's best in three months. The S&P 500 plummeted by 4.4%, marking its worst day since President Donald Trump's inauguration in April 2025.

The Dow Jones Industrial Average dropped by 1,833 points (3.4%), while the Nasdaq composite plummeted by 5.5%. The Nasdaq, heavily populated with AI-related and other tech stocks, fell 11.9% below its all-time high. Stock market experts consider a loss of more than 10% as a "correction." The global markets felt the pressure as companies benefiting from the artificial intelligence technology boom, including those in South Korea, saw their stocks tumble.

Critics argued that AI stock prices had become inflated, forming a bubble. Amidst these market turmoil, the US midterm elections added another layer of uncertainty. The Democratic victories raised concerns that governments might impose restrictions on AI data centre construction due to rising electricity costs. The heavy weight on the S&P 500 was the chip company Nvidia, which fell 9.3%, now down 2.6% for the year after annual gains of roughly 39%, 171%, and 239% in the last three years.

Other AI chip stocks, such as Advanced Micro Devices (down 17.3%), CoreWeave (down 9.8%), and GE Vernova (down 7.5%), also suffered significant losses. Despite these losses, some companies managed to turn in strong profits, with AppLovin and Tapestry rallying 31% and 7.1%, respectively. However, the overall S&P 500 fell by 334.89 points to 7,353.73, the Dow Jones Industrial Average dropped by 1,833.06 to 51,523.06, and the Nasdaq composite sank by 1,421.52 to 24,315.00.