Nasdaq loses $2.5 trillion as AI trade unwinds after US midterms

A massive selloff erased $2.5 trillion in market value from the tech-heavy Nasdaq on November 5, triggered by investor fears that a Democratic victory in the U.S. midterm elections would slow AI infrastructure development. The selloff was amplified by leveraged investors, particularly hedge funds that had borrowed heavily to bet on the AI boom. As stock prices fell, these funds faced margin calls and were forced to sell additional assets, creating a downward spiral that deepened the market decline. The panic was fueled by Democratic policy concerns, including Texas Governor-elect Gina Hinojosa's pledges to pause data center construction and end certain tax incentives. Analysts suggest the correction reflects over-leveraged positions rather than a fundamental end to the AI boom, though selling pressure may persist for several more days.