AI Stock Selloff Deepens as Data Center Fears Hit Nasdaq

Growing political resistance to artificial intelligence infrastructure triggered a major stock market selloff on Thursday, November 5, 2026, as investors reconsidered the growth prospects of data center companies following the US midterm elections. The Nasdaq Composite fell 5.5%, while semiconductor shares suffered particularly heavy losses.

According to Yahoo Finance, the VanEck Semiconductor ETF dropped 11.2%, while Nvidia lost 9.1%. All 11 stock market sectors finished lower, including traditionally defensive industries such as utilities and consumer staples.

Several other technology companies experienced even steeper declines. CNBC reported that Micron fell 17%, Sandisk plunged 22%, and GE Vernova declined 7% during Thursday's trading session. All three companies had also suffered substantial losses on Wednesday.

The downturn followed growing concerns that political opposition could slow data center construction. Infrastructure projects have become a contentious issue during election campaigns, particularly in Texas, where concerns about their impact on local communities have prompted calls for tighter regulations.

Texas governor-elect Gina Hinojosa supported a temporary pause on data center development and proposed restrictions on public subsidies. Her position reflects growing pressure to establish stronger protections before additional infrastructure projects proceed.

Speaking to CNN, Hinojosa explained her position on the issue.

"We will have laws to protect Texans, and we need to stop what we are doing with data centers until we have those protections," said Texas governor-elect Gina Hinojosa.

Meanwhile, CNBC commentator Jim Cramer warned that technology shares could face additional selling pressure despite the severity of Thursday's losses. He argued that elevated valuations and excessive expectations surrounding semiconductor companies had left the sector vulnerable to a correction.

"I wish I could say that today's flush was the bottom," said Jim Cramer, CNBC's Mad Money host.

Cramer distinguished the current downturn from the dot-com crash of 2000, emphasizing that many companies experiencing significant declines still operate profitable businesses. However, he noted that semiconductor valuations had become stretched following substantial gains.

"But I look at the charts, and there still seems like there's no support for so many Tech stocks, especially the semis, because they ran so much on the way up. However it might feel, it's actually an orderly decline because unlike 2000, these are mostly lucrative companies with stocks that went too high," said Cramer.

He also highlighted financial risks facing smaller data center developers, including CoreWeave, Iren, and Nebius. These businesses have relied on borrowed money to finance infrastructure expansion, making them vulnerable if regulatory delays disrupt construction schedules and expected revenue.

CoreWeave had already attracted investor concerns several weeks earlier after its bond yields reportedly climbed as high as 15%, raising questions about its ability to meet financial obligations.

"That's what I am chiefly worried about. That's the real problem. That's what could really hurt the stock market. ...

Right now, no one of significance is defaulting on their debt. The only issue with the debt is that it's connected to those neocloud companies that I mentioned. That's not enough to sink us," said Cramer.

Despite the risks, Cramer viewed the rapid market correction as a potentially more manageable way to remove excessive valuations than an extended period of gradual declines.

"I for one am glad they are ripping the Band-Aid off this market rather than slowing trying to take it off a little bit each day," said Cramer.

He advised investors to maintain sufficient cash reserves rather than react emotionally to falling share prices. Cramer also identified declining interest rates, easing inflation pressures, and the possibility of an end to the Iran war as factors that could support market recovery.

"If you have cash you won't panic. You won't be complacent, either. You will be clear-headed and that's how you will lose less money until things get better. They always do," concluded Cramer.