Investors wipe US$2.5 trillion off Nasdaq as blue tsunami prompts AI fears

The Nasdaq suffered its steepest one-day decline since April 2025, shedding US$2.5 trillion in market value, as investors braced for more scrutiny on AI-related infrastructure, particularly data center construction, following Democrats' big wins in the US midterm elections. The tech-driven Nasdaq's tech-heavy index plummeted 5.5 percent, marking its deepest single-day drop in nearly a year.

Analysts suggested the election outcome, especially with Democrats securing numerous governorships, signaled the potential slowdown in data center buildouts would be a key theme. Michael O'Rourke, a market strategist at JonesTrading, noted that the scale of the losses suggests further selling could begin in the Asian markets, where Japan's Nikkei and South Korea's Kospi saw sharp declines.

Chip and neocloud shares experienced the steepest declines, reflecting concerns over potential delays to billions of dollars worth of data center buildouts. Wall Street's fear gauge, the VIX, spiked to its highest level since December 2024. The Nasdaq 100, which tracks the biggest tech stocks, fell 6.4 percent, erasing nearly US$2.5 trillion in market value.

Analysts warned that the political and financial challenges could test the resilience of the AI trade, which has already faced scrutiny due to concerns over its return on investment.