Nasdaq falls nearly 4% as concerns over AI spending deepen

The Nasdaq Composite dropped nearly 4% to 24,712.60 on November 5 as technology shares came under pressure from concerns about heavy artificial intelligence investment and closer scrutiny of data-center expansion.

The decline left the index more than 10% below its October 6 record close of 27,599.89. A fall of that size from the latest closing peak is generally considered a correction, which would be the Nasdaq's second this year.

The losses wiped out the prior session's advance after Democrats won control of both congressional chambers. Investors were assessing whether further AI infrastructure development would face greater scrutiny. Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, said a change in political control could create uncertainty and abrupt policy shifts.

The Nasdaq lost more than $2.5 trillion in market value during October as sentiment toward AI-related shares weakened. Several major technology companies are borrowing to help fund planned investments worth billions of dollars in chips, data centers and supporting infrastructure.

Investors have questioned how soon that spending will generate profits, while Middle East tensions and concerns about persistent inflation have kept borrowing costs elevated. Alphabet's and Meta's earnings last month did not ease those concerns about AI returns, contributing to selling across AI-linked stocks.