Tech stocks face steepest decline in a year amid AI fears
The Nasdaq 100 index faces market-value losses exceeding $2 trillion as investors worry about AI infrastructure expansion.
Big tech stocks slumped on Thursday, according to a Mint report, putting them on track for their largest decline since last year's "Liberation Day" rout. The selloff was driven by investor concerns that the Democratic Party's midterm victory could slow the expansion of AI infrastructure.
The Nasdaq 100 index faced potential market-value declines of more than $2 trillion. This comes as smaller infrastructure firms, known as neoclouds, face limited funding due to higher interest rates and tighter financial conditions.
Semiconductor and neocloud companies saw significant losses. The Philadelphia SE Semiconductor index fell as much as 11.2 per cent, while Nvidia dropped 9 per cent and Advanced Micro slumped 15 per cent. Neocloud firms Nebius and CoreWeave also fell, with Nebius dropping 15 per cent and CoreWeave slumping 12 per cent.
Analysts noted that data center buildouts could face delays. UBS analysts estimated that roughly 30 per cent of the US data center capacity expected to be added by 2028 might be threatened by possible pauses in construction.
Bruce Zaro, managing director at Granite Wealth Management, said there will be pushback regarding data centers being located near communities and straining power and water systems. He noted that many facilities still require permits, which could lead to a difficult process.
The Nasdaq Composite is on track to enter correction territory. Other companies affected included Amazon.com, which fell 2.5 per cent, and Alphabet, which slid 2 per cent.
