Wall Street's worst day since 2020 wipes out trillions as AI bubble fears collide with midterm results

Stocks suffered their worst single-day loss in more than a year and a half on Thursday, November 5, as a rout in semiconductor and artificial-intelligence-linked shares spread across nearly every sector of the market. The S&P 500 closed at 7,353.73, down 334.89 points, or 4.36 percent, while the Nasdaq Composite fell 5.52 percent to 24,315.00, pushing it more than 10 percent below its October record and into what traders call a correction. The Dow Jones Industrial Average dropped 1,833.06 points, or 3.44 percent, to 51,523.06.

All three gauges recorded their worst session since April 2025, when markets were rattled by tariff announcements. The selling erased essentially all of the gains from the previous day's rally, which had followed Tuesday's midterm elections, according to CNBC's market coverage. The reversal was corroborated independently by StockTitan's market wrap and by the CBC, both of which described it as the worst day for AI-linked shares since the pandemic-era crash.

Chipmakers take the brunt

The damage was concentrated, but severe, in semiconductors. The iShares Semiconductor ETF had its worst day since March 2020, falling more than 12 percent, and individual chip stocks were hit even harder: Micron fell 17.46 percent, AMD 17.26 percent, Marvell Technology 16.43 percent, Arm Holdings 13.08 percent, Broadcom 10.43 percent, Intel 10.33 percent, Qualcomm 9.49 percent and Nvidia 9.26 percent. Those eight stocks lost an average of nearly 13 percent in a single session.

The losses extended into companies that supply or rent out AI computing capacity. CoreWeave fell 9.83 percent, Nebius and Iren each dropped sharply during the session, and Oracle, whose cloud business has become a bellwether for AI infrastructure demand, slid nearly 7 percent. Taken together, the seven largest technology companies known as the "Magnificent Seven" lost close to $900 billion in combined market value, per CNBC's tally. The selling was not confined to the United States: South Korea's Kospi closed down 5.28 percent, with chipmaker SK Hynix falling 9.03 percent, a sign the rout had gone global.

A beat that wasn't enough

Qualcomm's results illustrated how little an earnings beat mattered to investors on a day dominated by sentiment. According to the company's own 8-K filing with the Securities and Exchange Commission, Qualcomm reported fourth-quarter fiscal 2026 revenue of $10.322 billion and non-GAAP diluted earnings of $2.17 a share, within the company's own guidance range of $2.05 to $2.25. Handset revenue in its QCT segment came in at $5.137 billion. For the first quarter of fiscal 2027, Qualcomm guided to revenue of $10.4 billion to $11.2 billion and non-GAAP earnings of $2.15 to $2.35 a share. Despite results that were in line with or ahead of expectations, Qualcomm shares still fell roughly 9.5 percent, dragged down by the broader chip rout and lingering questions about handset demand.

Politics collides with the AI trade

The proximate trigger, according to multiple accounts of the session, was political rather than financial. Tuesday's midterm elections delivered Democrats control of both the House and the Senate, with Representative Hakeem Jeffries positioned to become Speaker, according to CBS News's live results coverage. Investors had initially read the outcome as benign for markets on Wednesday, pushing indexes higher. By Thursday, that interpretation reversed: traders began pricing in a Congress less willing to accommodate rapid, lightly regulated AI data-center expansion.

That shift was reinforced by results further down the ballot. Local referendums on data center projects were rejected in 40 of 41 instances nationwide, a reflection of a broader public backlash that pollsters at the University of Pennsylvania's Annenberg Public Policy Center have tracked for months, with roughly three in five Americans now opposed to data centers in their communities. In Washington, Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez had already introduced the AI Data Center Moratorium Act earlier in the year, which would pause new construction of large AI data centers pending federal safeguards, according to a press release from Senator Sanders's office. The bill had been given little chance of passage in a divided Congress; a Democratic sweep revived speculation that similar restrictions could gain traction. Strategists at UBS, cited in market commentary on the selloff, estimated that roughly 30 percent of the data-center capacity additions projected for 2028 are now at risk from slower approvals and financing.

Who is absorbing the losses

The damage reached well beyond chip designers. Server makers Dell and HPE declined alongside their semiconductor suppliers. Index funds tracking a broad swath of the market fell in tandem: the SPDR S&P 500 ETF dropped 4.41 percent, the Invesco QQQ Trust tracking the Nasdaq-100 fell 6.49 percent, and the iShares Russell 2000 ETF lost 4.59 percent, with the small-cap benchmark also entering a correction. All 11 sectors of the S&P 500 finished lower. The CBOE Volatility Index, a measure of expected market turbulence, briefly spiked to 28.09, its highest level since March 31, before easing.

The losses are not confined to Wall Street trading desks. Large declines in mega-cap technology names flow directly into the retirement accounts and index funds that make up a substantial share of ordinary households' savings, given how heavily the S&P 500 and Nasdaq are now weighted toward a small number of AI-linked companies.

Thursday's rout also revived a debate that strategists have carried through much of the past year: whether valuations across chipmakers and cloud-infrastructure providers have run ahead of the revenue those companies have actually booked from artificial intelligence, as opposed to the capital they have committed to building it. Hyperscalers' combined capital spending plans for AI infrastructure have climbed into the hundreds of billions of dollars annually, a scale some analysts have warned the market was pricing in as a near-certainty rather than a probability. Thursday's session, coming immediately after a change in Washington's political complexion, gave that debate a fresh and concrete catalyst rather than a purely speculative one.

Reaction and what comes next

"Unlike on Wednesday, the size of the tech selloff is now feeding into the broader market," said Keith Lerner, chief market strategist at Truist Wealth, one of the more widely cited voices in Thursday's coverage.

"The rubber band is becoming increasingly stretched."

Tim Holland, chief investment officer at Orion, said investors were "stepping away" from the AI trade until they have a clearer picture of what the new Congress means for data-center spending, while a note from MRB Partners argued the midterm results would "add to headwinds for big tech and the data center buildout." Needham analyst Laura Martin and Siebert Financial's Mark Malek, both quoted in follow-up market commentary, drew a distinction between companies that already own data-center capacity, which they framed as relative beneficiaries of a slower buildout, and heavily leveraged infrastructure borrowers, which they described as more exposed.

The selloff also reshaped expectations for the Federal Reserve, whose next scheduled policy meeting, on December 9, now looms as the next major catalyst. Futures-implied odds of a quarter-point rate increase at that meeting slipped to about 70 percent from roughly 83 percent a day earlier, as traders judged that a sharp equity-market wobble makes additional tightening somewhat less likely, even as the current target range of 3.75 to 4.00 percent remains higher than markets had expected earlier in the year.

Markets will next look for whether Thursday's reversal proves to be a one-day repricing of political risk or the start of a deeper reassessment of AI infrastructure spending, which has underpinned much of the broader market's gains over the past two years. Upcoming results from other large chip and cloud companies, further clarity on the new Congress's committee assignments and legislative priorities, and the Fed's December decision are likely to determine whether Thursday's losses are retraced or extended.