Nasdaq 100 drops 6.36% as investors reassess AI spending

A $2.3 trillion loss in market value sent the Nasdaq 100 back to April levels on Thursday, as technology shares slumped and investors weighed high AI infrastructure costs, tighter financing and political resistance to new data centers.

Editorial·November 6, 2026·reads: 3,510

Nasdaq 100 drops 6.36% as investors reassess AI spending

The tech-heavy index fell 6.36% to 26,629.81 points, despite remaining up about 5.5% since the start of the year. It had reached a record high in October. The S&P 500 dropped 4.36% to 7,353.73, its steepest daily decline since April 2025. Value stocks also fell, in some cases sharply.

Analysts had warned for months that valuations at companies including Nvidia, Seagate, Western Digital and Sandisk had moved well beyond normal levels. Nvidia shares slid 9.3% on Thursday, Tesla fell 10.8%, and SpaceX, the space and AI company, lost 9.1%.

Brian Levitt, Invesco’s chief global market strategist, described the pullback as a correction in an overheated market, not the bursting of an AI bubble. He cited rising financing costs, political opposition to data-center projects and investment expectations that may have run ahead of what companies can profitably build.

AI infrastructure requires substantial spending on data centers, semiconductors and memory technologies, along with large amounts of energy and increasingly expensive equipment. Higher interest rates have made new projects costlier to finance. Meanwhile, semiconductor companies have expanded capacity to meet anticipated demand for computing power, though Levitt said some parts of the industry may have overestimated how much capacity will be needed in the near term.

Democratic candidates skeptical of further data-center expansion won electoral victories, adding uncertainty around projects in states including Texas, Ohio and Georgia. Local opposition is also growing. Levitt said, however, that higher interest rates and the scale of planned investment pose a greater risk to the pace of AI spending than the election results.

He expects demand for computing power to continue rising and sees AI as a major long-term investment theme. A slower, more disciplined build-out could better align financing, profitability and actual demand. But selling could overshoot: if hedge funds and other leveraged investors cut positions, their sales could trigger further pressure beyond what changes in business prospects alone would warrant.