Chip selloff drags global stocks lower as AI spending doubts deepen

What turned Wednesday’s rally into Thursday’s rout?

On Thursday 5 November 2026, the market rally that followed the Democrats’ sweeping midterm victory lasted barely a day. Global stocks fell hard, dragged down by a selloff in semiconductor shares that gathered speed through the New York session and spread across Asia and Europe. The Philadelphia Semiconductor Index, the benchmark for the world’s chipmakers, slumped 11 per cent, and the Nasdaq Composite dropped 5.2 per cent, putting the technology-heavy index on course to confirm a correction, a fall of 10 per cent from its record closing high on 6 October. The Dow Jones Industrial Average fell 2.2 per cent and the S&P 500 slid 3.4 per cent, while the MSCI All-World index lost 2.5 per cent and Europe’s STOXX 600 gave up 0.67 per cent.

The trigger was a mix of weak earnings and politics. Qualcomm’s smartphone-chip sales missed Wall Street estimates, sending its shares down 11 per cent, and investors weighed what a Democrat-controlled Congress would mean for the artificial-intelligence buildout that has powered the market for two years. Candidates who campaigned against new data centres won in Texas and Georgia, and dozens of ballot measures passed on Tuesday stand to limit construction in the months ahead. The selloff was the second straight day of declines for chip shares, and it erased the gains of Wednesday’s broad rally, when the Dow had jumped 1,569 points for its best day since April 2025. The blue wave that lifted Wall Street on Wednesday hit the same market from the other side a day later, as the industry that had carried the rally became the one investors sold first.

How far did the chip selloff reach?

The damage was broad and it was deepest in the names most tied to artificial intelligence. The semiconductor index fell as much as 11 per cent during the session, its worst performance since March 2020, and more than a dozen large technology stocks fell by double-digit percentages, among them Advanced Micro Devices, SanDisk, Micron, Dell and Marvell Technology. Nvidia, the heaviest weight in the S&P 500, fell about 8 per cent, while Advanced Micro Devices tumbled 15.9 per cent and CoreWeave, the cloud firm that rents access to AI chips, fell 14.9 per cent. Data-centre operators Applied Digital, Cipher Digital and IREN tumbled more than 18 per cent, and Qualcomm slid further to a 12.8 per cent loss in later trading after its quarterly smartphone-chip sales missed estimates.

Asia felt it in its own trading day: South Korea’s Kospi tumbled 5.3 per cent and Japan’s Nikkei 225 sank 1.8 per cent, with SK Hynix down almost 8 per cent. The Nasdaq 100 was set to lose about $1.8 trillion in stock value, and the chip gauge that tracks the sector’s giants has now fallen 36 per cent from its June record. Outside equities, the flight showed up everywhere at once: gold traded above $4,100 an ounce after rising 5 per cent in two days, its largest two-day jump since early April, Brent crude rose 2.58 per cent to $97 a barrel, and the Bank of England raised interest rates for the first time since 2023. The tallies differ slightly by the hour they were taken, with one wire putting the S&P 500’s fall at 3.2 per cent rather than 3.4 per cent, but every count agrees on the shape of the day: chips led, technology followed, and the rest of the market could not escape.

What is still unclear about the selloff?

Whether this is one sharp day of repositioning or the start of a longer reset in AI stocks is still open. The Nasdaq’s record close on 6 October was 27,599.89, so a confirmed correction depends on where the index closes, not where it traded during the day, and the final counts had not settled when the first reports went out. Nor is it settled whether Congress will actually slow the buildout: the Democrats hold both houses, but the president still holds the veto, and the construction pauses analysts warn about are potential, not decided. UBS strategists estimated that around 30 per cent of expected United States data-centre capacity additions in 2028 could face disruption, but that is an estimate of risk, not a count of cancelled projects.

It is also unclear whether AI spending itself will fall. As recently as last week, the largest cloud companies signalled they would keep pouring money into data centres and chips, and together the four biggest are on track to spend more than $700 billion on capital investment this year. What changed on Thursday was not their spending plans but the price investors are willing to pay for them, and the October jobs report due on Friday, with traders expecting the Federal Reserve to raise rates next month after September’s hike, could move the picture again before the week is out.

Why does a chip selloff reach beyond Wall Street?

The artificial-intelligence trade has powered the bull market, so a reckoning for it is a reckoning for the market as a whole. The buildout of data centres, chips, servers and power equipment has vacuumed up goods and services across the economy and driven much of the United States’ growth, and the companies behind it have borrowed heavily to fund it. Selling in stock and bond markets has already reduced access to financing for many participants in the buildout, and CoreWeave’s five-year credit default spreads widened to a record high, according to S&P Global Market Intelligence, a sign that lenders are charging more for the risk of debt-funded expansion.

The political turn gives the repricing a second engine. Tuesday’s elections brought the passage of dozens of nationwide ballot initiatives that stand to limit building in the coming months and years, and the candidates who won in Texas and Georgia campaigned in part on moratoriums for new developments. The market, in the words of one investment chief, is moving from the promise of AI to the price of AI, and that shift touches everyone from the pension funds that hold the big technology names to the towns asked to host the next data centre. The midterm verdict and the cost of living that decided it are now the same story as the market’s, and the economy under pressure that voters judged on Tuesday is the economy investors repriced on Thursday.

What the market is really repricing

Looked at through the five dimensions, the day reads as a collision rather than a single cause. Geopolitically, the midterm sweep handed Congress to a party that has promised closer scrutiny of the AI buildout, while the war with Iran, which President Donald Trump acknowledged on Wednesday had played a role in his party’s defeat, pushed oil higher and kept energy markets on edge. Economically, the financing model is under strain: the big technology companies are issuing more equity and more bonds to fund AI spending while their free cash flow falls, and Apple, one of the largest buyers of chips, is cutting back on AI spending because it is not seeing a sufficient return. The technology dimension is the promise itself: two years of spending justified by the belief that returns would follow, and a market now asking, out loud, when they arrive.

History offers the warning and the comfort at once. The semiconductor index is down about 31 per cent from its 52-week high, which one New York investment chief described as a private bear market that almost nobody is discussing, and the Nasdaq’s slide from its October record is the sharpest test of the AI trade since the summer. Yet the rotation inside the day tells its own story: defensive industries such as consumer staples and health care climbed while chips fell, and the hyperscalers that had defied the selloff on Wednesday, on bets that slower construction could rein in their spending, only joined the decline late. The market is not abandoning artificial intelligence; it is repricing who pays for it, and at what speed.

What happens when the buildout slows?

If data-centre construction pauses, the effects travel down a long supply chain. Chipmakers sell fewer processors, server makers sell fewer machines, and the power-equipment firms that feed the centres, GE Vernova among them, fell 9.1 per cent on Thursday, lose orders before a single centre is cancelled. The towns and states that courted the centres face a different question: the moratoriums that won on Tuesday were driven by residents worried about power grids, water systems and the pace of construction in their backyards, and a slower buildout eases that pressure while cutting the jobs and tax revenue the projects promised.

The second-order effects reach beyond the United States. Asia’s chip exporters, South Korea and Japan among them, saw their markets fall with the American ones, and the financing strain is global: Apple plans to raise about $7 billion from an investment-grade bond sale, adding to a flurry of issuance from companies funding the same buildout. Gold’s rise and the bond market’s move into Treasuries show investors reaching for safety, and if the pause lasts, the next question is which countries and companies can keep building when borrowing costs stay high and political patience runs short.

What to watch on Friday

The October jobs report lands on Friday, and it is the first hard data point that could steady or deepen the selloff, with traders watching it for what it says about the Federal Reserve’s expected rate rise next month. The Nasdaq’s close matters too: a finish more than 10 per cent below the 6 October record confirms the correction, and the first buyers to return, or the absence of them, will say more about sentiment than any single session. Watch the chipmakers’ guidance, the hyperscalers’ spending signals, and the state-level decisions in Texas and Georgia, where the moratorium debate moves from campaign promise to law. The Bureau’s own account of how the blue wave first hit Wall Street carries the Wednesday side of this story, and the lending slowdown that pushed Morocco out of the World Bank’s top borrowers is a reminder that the financing squeeze is not an American story alone.