Wall Street loses $2.5 trillion as AI bets and leveraged loans trigger selloff

The Nasdaq lost $2.5 trillion in value on Thursday as investors sold tech stocks amid fears that Democratic election wins could slow AI growth. Leveraged investors faced margin calls, intensifying the selloff. Hedge funds that borrowed heavily to amplify AI bets were forced to liquidate positions to meet capital requirements, creating a vicious cycle of falling prices and further selling. The market had initially rallied Wednesday before reversing Thursday. Analysts say the decline reflects overleveraged positions rather than a fundamental crash, though forced selling may continue for days. Texas Democrat Gina Hinojosa's pledge to pause data center construction added to regulatory concerns.