Nasdaq drops 5.5% after the US midterms as AI and memory stocks plunge

Worst day since April 2025

The Nasdaq Composite closed down 5.52% at 24,315.00 on Thursday, Nov. 5. According to Yahoo Finance data, it was the index’s steepest daily drop since April 4, 2025, the week the “liberation day” tariffs on US trading partners were announced. The Guardian reports that nearly $2 trillion was wiped off the Nasdaq’s value in a day. The index finished 11.9% down from its Oct. 6 record close of 27,599.79, and a drop of more than 10% from a record is known as correction territory.

The S&P 500 fell 4.36% to 7,353.73 and the Dow Jones Industrial Average lost 3.44% to 51,523.06. The VIX, Wall Street’s “fear index,” jumped 70% to 28.18. Markets had risen the day before, when the Nasdaq gained 1.44% and the Dow 3.03%.

Nov. 5 losses in memory and chip stocks

• SanDisk: 22.3%
• Micron: 17.5%
• Western Digital: 17.4%
• Nvidia: 9.3%

Data centers and a new Congress

According to the Guardian, chip stocks led the slump. Analysts tied it to expectations that Democrats, after winning a series of governor’s races this week, will clamp down on new data centers. Voters also rejected data centers in a number of local ballots across the country. Tech analyst Dan Ives said Democrats taking control, “especially over the Senate,” will create “major hurdles” for AI and tech legislation over the next two years.

Neil Wilson of Saxo UK described a “complete capitulation-level event” in tech stocks but said the sell-off “looks totally overdone.” Ted Parkhill of Incline Investment Management said “the market’s moving from the promise of AI to the price of AI.” The Guardian reports that the selling spread to Asia on Friday morning, with Japan’s Nikkei 225 down 6% and South Korea’s Kospi down more than 8% in early trading.

How AI PACs fared

TechCrunch reports that AI-linked political groups spent millions in the election, with mixed results. Leading the Future is backed by OpenAI president Greg Brockman and Andreessen Horowitz. Its Republican arm, American Mission, and Building the Future spent $4.8 million backing Darline Graham in South Carolina, and Graham lost. Two House candidates on whom American Mission spent more than $500,000 each also lost.

Anthropic-backed Public First gave $3 million to a PAC supporting Scott Wiener in California, who was leading when the article ran. TechCrunch notes that it is hard to separate the effect of this spending from the broader Democratic wave.