U.S. Tech Stocks Plunge as AI Investment Expectations Come Under Pressure
After the U.S. midterm elections, tech stocks sold off sharply. The Nasdaq 100 fell more than 6% on November 5, wiping about $3.2 trillion from U.S. stock market value that day. Investors are concerned about potential obstacles to data center construction, rising borrowing costs and weakening valuation expectations for AI companies.
U.S. tech stocks faced a sharp sell-off on November 5, wiping about $3.2 trillion from stock market value. The Nasdaq 100 fell more than 6% that day, rebounded 1.4% on November 6 and still ended the week down 4.9%. Until then, the AI investment boom had been a major driver of U.S. stock market gains.
File photo of U.S. stock market trading.（VietVance）
The Financial Times reported that hedge funds sharply reduced leveraged positions in tech stocks, while individual investors also joined the sell-off. Markets are concerned that policy obstacles following the U.S. midterm elections could slow construction of infrastructure such as data centers, affecting anticipated AI investment plans. Rising borrowing costs and heavy capital spending by major technology companies have added to investors’ doubts about returns.
JPMorgan Chase said November 5 was the worst single day for its hedge fund clients since the U.S. announced “Liberation Day” tariffs last year. The value of their assets fell 1.6% that day. Some investors believe the political risks may be overstated; others worry that slower AI investment will weigh on corporate profits and U.S. economic growth.
Valuations of privately held AI companies are also drawing attention. Citing people familiar with the matter, Bloomberg reported that OpenAI has raised $11 billion in a funding round that has yet to close, valuing the company at $1.25 trillion. Bloomberg also reported that some prospective investors value Anthropic at about $1.1 trillion, below the $1.5 trillion to $2 trillion that investors had expected roughly a month earlier.
Source: VietVance
