Nasdaq 100 eyes $1.8 trillion loss as Democratic win sparks AI delay fears

By Niket Nishant

Nov 5 (Reuters) - The Nasdaq 100 index was set to lose a whopping $1.8 trillion in stock value on Thursday as investors feared that the sweeping midterm victory of Democrats could stall the pace of AI infrastructure expansion.

Shares of semiconductor and neoclouds companies, which were behind much of the market's gains in the recent past, witnessed sharp declines for a second straight day on worries that data center buildouts worth billions of dollars could face delays.

Shares of CoreWeave, which have become a barometer of investor anxiety over heavy AI spending, slumped 11.4%. CoreWeave's five-year credit default spreads widened to a record high, according to data from S&P Global Market Intelligence.

Nebius, another neocloud company, dropped 15.2%.

Chipmakers also tumbled. The Philadelphia SE Semiconductor index dropped 10.2%, touching its lowest in more than six months, dragged down by losses in heavyweights Nvidia and Broadcom.

The sharp losses put the Nasdaq Composite on course to confirm a correction, or a 10% drop from its recent peak.

Investors worry Democratic control of Congress could bring tougher scrutiny of the data-center industry, potentially slowing development at a time when public opposition to new facilities is already mounting.

Around 30% of expected US data center capacity additions in 2028 could be at risk from potential construction pauses, UBS analysts estimated, highlighting the threat to an industry whose growth depends on a rapid build out of new facilities.

The political uncertainty adds to pressure on the broader AI trade, as investors increasingly question whether the enormous capital spending required to build AI infrastructure will generate sufficient returns.

"The market's moving from the promise of AI to the price of AI," said Ted Parkhill, founder and CEO of Incline Investment Management.

"There's no question that AI is going to be transformative for the world in the long run. But that doesn't mean every AI-related stock is currently priced appropriately. There's going to be a lot of turmoil."

Data-center operators Applied Digital, Cipher Digital and IREN tumbled more than 18%.

The weakness extended to utilities and equipment suppliers exposed to the buildout. GE Vernova fell 8%, while Constellation Energy slipped 5%.

Hyperscalers, which defied the selloff on Wednesday on bets that slower data-center construction could rein in Big Tech's AI spending, also dropped.

Amazon.com fell 3.9% and Alphabet shed 2.7%.

Separately, Qualcomm plunged 12.8% after quarterly smartphone-chip sales missed Wall Street estimates.

(Reporting by Niket Nishant and Shashwat Chauhan in Bengaluru; Editing by Anil D'Silva and Arun Koyyur)