The Nasdaq Plunges 5%. What the Data Center Crash Means for Investors

The Motley Fool · Jeremy Bowman · 2026-11-06 03:00 UTC

Investors are afraid of a data center slowdown. Will it really happen?

Is the AI bubble bursting?

That question was on the minds of millions of investors on Thursday, as the Nasdaq Composite (^IXIC -5.52%) had one of its worst days ever, plunging 5.5% as fears spread that a political backlash could choke the AI boom, following the midterm election.

Investors believe that election winners in Texas and elsewhere will slap significant restrictions or even outright bans on data centers, which became a lightning rod during the campaign. After chip stocks were among the few losers on Wednesday, they collapsed on Thursday, with the VanEck Semiconductor ETF losing 11.2%. Even industry leader Nvidia lost 9.1%, and the crash triggered a broader sell-off across the stock market, with all 11 sectors falling, even defensive ones like utilities and consumer staples.

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