Tech stocks tumble as AI infrastructure concerns spark major market selloff

Major technology shares tumbled sharply on Thursday, dragging major indexes down as mounting concerns over artificial intelligence infrastructure costs, regulatory hurdles, and tighter financing triggered widespread selling.

The Nasdaq 100 index was poised to shed more than $2 trillion in market capitalization as the selloff intensified for a second consecutive session. Investors reacted to shifting political dynamics following sweeping Democratic midterm election victories, which sparked worries that future data center expansions might slow down. Stricter financial conditions and elevated interest rates have also compounded fundraising difficulties for smaller specialty infrastructure firms.

The broader Nasdaq Composite headed toward correction territory, marked by a drop of at least 10% from its recent peak recorded on Oct. 6, while the Nasdaq 100 fell 5.9%. Market analysts noted that while pullbacks in semiconductors and AI-related equipment were not unexpected after massive run-ups, the depth of the retreat signals a broader shift in sentiment.

Semiconductor companies and specialized cloud operators, known as neoclouds, suffered some of the heaviest losses. The Philadelphia SE Semiconductor index dropped as much as 11.2% to its lowest point in more than six months. Among chipmakers, Advanced Micro Devices tumbled 15%, while Nvidia declined 9%.

Smaller infrastructure providers were hit particularly hard. Shares of CoreWeave dropped 12%, with its five-year credit default spreads reaching historic highs, according to data from S&P Global Market Intelligence. Fellow neocloud operator Nebius lost 15%. Both companies have seen their share values decline by half or more since the Nasdaq Composite reached its peak in October.

Other data center operators also faced steep declines, with Applied Digital, Cipher Digital, and IREN each sliding more than 14%. The downturn spilled over into related energy and equipment providers as well. GE Vernova shed approximately 6%, Constellation Energy dropped 3%, and Microsoft slipped 2% amid reports that it is increasing scrutiny over certain data center partnerships.

Larger technology giants experienced drops as well, with Amazon declining 2.5% and Alphabet falling 2%.

Industry watchers highlighted mounting operational friction surrounding data center development, including local pushback regarding demands on regional power grids and water supplies. UBS analysts estimated that roughly 30% of projected U.S. data center capacity growth scheduled for 2028 could face risks from possible construction delays, adding to growing skepticism about near-term returns on substantial technology investments.