AI storm dooms tech stocks to $2 trillion decline on darkest day since 2025

Big tech stocks plummeted on Thursday, sending them on course for the largest decline since the 2025 AI-driven rout, according to Reuters. The Nasdaq 100 index was poised to record market-value losses surpassing $2 trillion, driven by concerns that the Democratic Party's midterm victory might obstruct AI infrastructure growth and subject smaller firms to financial strain due to higher interest rates and tighter conditions.

Analysts and portfolio managers noted that declines in previously booming sectors like semiconductors and AI infrastructure were not entirely unexpected, given the extent of earlier gains and mounting worries about financing for smaller infrastructure firms, including Nebius and CoreWeave, since the US raised interest rates late last summer.

Nonetheless, many analysts pointed to the scale of today's losses as a potential sign of changing sentiment, hinting at additional selling. While volatility has not yet reached capitulation or contrarian extremes, the extent of the drop across consecutive days signals a shift in investor outlook. Semiconductor and neocloud companies bore the brunt of the decline, with shares of Nvidia and Advanced Micro falling 9% and 15%, respectively.

Hyperscalers, such as Amazon and Alphabet, also registered losses. The selling reflects apprehension over the financial burden of massive data center buildouts, with some critics highlighting the environmental and infrastructure costs that have yet to be fully evaluated. Data-center operators Applied Digital, Cipher Digital, and IREN suffered more than 14% losses, while utilities and equipment suppliers tied to the buildout faced declines.

Microsoft experienced a 2% drop as the market transitions from the potential of AI to the reality of its costs. Despite the transformative potential of AI in the long run, experts warn that not all AI-related stocks are currently appropriately valued, anticipating further turmoil in the sector.