Nasdaq 100 eyes $1.8 trillion loss as Democrats win sparks fears of AI lag

By Niket Nishant

Nov 5 (Reuters) – The Nasdaq 100 index is expected to lose a whopping $1.8 trillion in stock value on Thursday as investors fear Democrats’ resounding midterm victory could slow the pace of AI infrastructure expansion.

Shares of semiconductor and neocloud companies, which were responsible for much of the market’s gains in the recent past, saw sharp declines for a second straight day on concerns that construction of billions of dollars worth of data centers could face delays.

Shares of CoreWeave, which have become a barometer of investor anxiety over heavy AI spending, fell 11.4%. CoreWeave’s five-year credit default spreads have widened to a record high, according to data from S&P Global Market Intelligence.

Nebius, another neocloud company, fell 15.2%.

Chipmakers also fell. ‌The Philadelphia SE Semiconductor index fell 10.2%, hitting its lowest level in more than six months, dragged down by losses at heavyweights Nvidia and Broadcom.

The sharp losses put the Nasdaq Composite on track to confirm a correction, down 10% from its recent high.

Investors worry that Democratic control of Congress could lead to tighter control of the data center industry, which could slow its development at a time when public opposition to new facilities is already growing.

About 30% of planned additional U.S. data center capacity in 2028 could be at risk from possible construction pauses, UBS analysts estimate, underscoring the threat to a sector whose growth depends on the rapid construction of new facilities.

Political uncertainty is adding to pressure on the broader AI business, as investors increasingly question whether the huge capital expenditures needed to build AI infrastructure will generate sufficient returns.

“The market is moving from the promise of AI to the price of AI,” said Ted Parkhill, founder and CEO of Incline Investment Management.

“There’s no doubt that AI is going to transform the world in the long term. But that doesn’t mean that all AI-related stocks are currently valued appropriately. There’s going to be a lot of unrest.”

Data center operators Applied Digital, Cipher Digital and IREN fell more than 18%.

The weakness extended to growth-exposed utility and equipment providers. GE Vernova fell 8%, while Constellation Energy fell 5%.

Hyperscalers, which defied Wednesday’s selloff by betting that slower data center construction could curb Big Tech’s AI spending, also fell.

Amazon.com fell 3.9% and Alphabet fell 2.7%.

Separately, Qualcomm plunged 12.8% after quarterly smartphone chip sales missed Wall Street estimates.

(Reporting by Niket Nishant and Shashwat Chauhan in Bangalore; editing by Anil D’Silva and Arun Koyyur)

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