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Nasdaq plunges into correction territory as midterm results raise fresh questions about AI boom
- On Thursday, the Nasdaq Composite officially entered correction territory, falling more than 10% below its October 6 record high as investors retreated from AI-linked infrastructure stocks following Democratic midterm election victories.
- Democratic midterm wins prompted fears of stricter data center regulation; UBS analysts estimate that 30% of expected 2028 capacity additions now face potential construction pauses, threatening the AI buildout.
- Nvidia and AMD led the rout, with Nvidia falling 8.7% as the Nasdaq-100 shed over $2.2 trillion in market value, reflecting the intensity of the retreat from chip and data center stocks.
- Hedge funds cut leverage and reduced teams as volatility soared; Goldman Sachs reported that funds are "selling back pockets of the market" they had recently bought, compounding losses.
- JPMorgan analysts expect the AI boom to persist but become costlier and slower in coming years, marking the steepest decline since April 2025's "Liberation Day" tariff sell-off as growth assumptions recalibrate.
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At the leading AI companies, the previous euphoria gives way to a noticeable disillusionment. However, the global price slip does not mark an end to the boom, but rather a turnaround. Analyst Lipkow emphasizes: The AI cycle grows out of its infancy.
An AI reckoning? Investors brace for potential fallout
Further declines would have wide-ranging financial and economic consequences amid the massive AI spending, much of it fuelled by companies taking on huge amounts of debt. AFP takes a look at how tech sector weakness could impact governments and households. The AI motor Outlays on data centres to train and power artificial intelligence models have become one of the main growth engines for the US economy, the world's largest. "That contributed to …
·Issy-les-Moulineaux, France
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Total News Sources592
Leaning Left72Leaning Right95Center150Last UpdatedBias Distribution47% Center
Bias Distribution
- 47% of the sources are Center
47% Center
L 23%
C 47%
R 30%
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