U.S. technology stocks fell sharply on November 5, 2026, as investors reassessed the cost of expanding artificial intelligence (AI) and the possibility of stricter oversight of data-center projects. The Nasdaq Composite fell 5.52% to close at 24,315.00 points. Separately, the Nasdaq-100 dropped approximately 6.4%, wiping an estimated $2.5 trillion from the combined market value of its companies, according to Reuters reporting.
The sell-off marked the Nasdaq’s biggest one-day percentage decline since April 2025. Investors became increasingly worried about the large amounts of money technology companies are spending on AI development, data centers, and advanced computer chips.
Several major technology companies suffered heavy share-price declines. Nvidia, a leading supplier of processors used in AI data centers, fell approximately 9.3%. Advanced Micro Devices (AMD) dropped around 17.3%, while Microsoft declined about 3.6%. Alphabet and Meta were also caught in the broader sell-off. The sharp losses reflected growing concerns about AI-related stock valuations, infrastructure spending, and future returns.
The semiconductor industry also faced pressure following new financial results from major chipmakers. Qualcomm released its fourth-quarter fiscal 2026 results on November 4, reporting a 26% year-over-year decline in handset-chip revenue. Its official earnings release provided another example of the different pressures facing semiconductor companies, even as demand for AI computing remains an important growth opportunity.
One major concern was the rising cost of AI infrastructure. Amazon, Alphabet, Microsoft, and Meta have announced large investment plans covering data centers, servers, networking equipment, and other technology projects. AI is an important driver of this spending, although not every dollar is devoted exclusively to artificial intelligence. As explained in TechBonafide’s report on AI data-center spending, investors are increasingly questioning how quickly these investments will generate enough revenue and profit to justify their costs.
Political uncertainty also influenced the market following the November 3, 2026, US midterm elections. After Democrats won control of Congress, some investors became concerned that lawmakers could increase scrutiny of artificial intelligence companies and large data-center projects. Questions about electricity prices, water consumption, and environmental effects were already part of the debate. However, these concerns do not mean that new nationwide restrictions on AI data-center construction have already been introduced.
AI data centers depend on powerful processors, networking equipment, reliable electricity, and cooling systems. The US Energy Information Administration’s analysis of data-center electricity consumption projects that power demand from data-center servers will increase significantly over time. Delays in obtaining electricity connections or building additional infrastructure could make some projects more expensive. TechBonafide’s guide to AI training and inference data centers also explains why different AI workloads require different amounts and types of computing infrastructure.
Losses spread across the wider US stock market. The S&P 500 fell approximately 4.4% to close at 7,353.73 points, while the Dow Jones Industrial Average declined about 3.4%, losing more than 1,800 points to finish at 51,523.06. Technology and semiconductor companies were among the hardest hit, but the selling also affected businesses outside the artificial intelligence industry.
The Nasdaq Composite also entered correction territory after closing approximately 11.9% below its October 6, 2026, record closing high of 27,599.89 points. A market correction generally means an index has fallen at least 10% from a recent peak. Although the decline shows how sharply technology shares have weakened, entering correction territory does not automatically mean that stock prices will continue falling.
The sell-off also spread to Asian markets on Friday, November 6. South Korean technology and semiconductor shares fell sharply as investors reassessed the outlook for AI infrastructure spending. According to Reuters’ report on South Korean stocks, the market experienced severe selling pressure following the US technology-stock decline. The weakness showed how concerns about AI investment in the United States could also affect chipmakers and equipment suppliers in other countries.
Despite the sharp decline, the market losses do not necessarily mean that AI technology is failing. Artificial intelligence continues to play an important role in cloud computing, business software, automation, and digital services. The main concern is whether companies can turn their massive investments into sustainable profits.
For businesses developing AI systems, the market decline highlights the importance of controlling costs and showing clear financial results. Companies that depend heavily on expensive computing infrastructure could face additional challenges if borrowing costs remain high or demand grows more slowly than expected.
Investors will now be watching upcoming company earnings, AI chip demand, infrastructure spending plans, and possible policy proposals affecting data-center construction. These concerns had already influenced trading before November 5, as highlighted in TechBonafide’s earlier report on Nasdaq futures falling amid AI spending worries. Strong earnings and clearer evidence of profitable AI services could improve investor confidence, while disappointing results or new uncertainty could create further pressure.
