AI stocks rebound after $13.2 trillion market selloff

Midterm election results trigger market volatility

The Nasdaq index fell by 6.3 percent after anti-AI candidates won in the United States midterm elections. Newsweek reported that the market selloff was driven by fears that Democratic election victories would result in restrictions on data center development and AI infrastructure expansion.

The market selloff was fueled by concerns that Democratic gains in the midterm elections could lead to stricter regulations on AI development and data-center construction. The World Socialist Web Site estimated the total market decline at $3.2 trillion, attributing the selloff to concerns that Democratic gubernatorial victories would lead to restrictions on AI development.

Six major tech companies lead sector decline

Coin Bureau noted that the $13.2 trillion in lost market value is larger than the annual GDP of any country except for the United States and China.

Market losses are primarily concentrated in companies that provide the physical infrastructure for AI, including memory suppliers, chipmakers, hyperscalers, and power providers. Hale mentioned that she had comparisons of average declines across different sectors, but these figures were not included in the report.

TSMC recorded a 28 percent decline from its 2026 peak, resulting in a $700 billion reduction in market value. Meta's market value dropped by $501 billion, which is a 25 percent decline from its 2026 high. Alphabet and Nvidia recorded the largest reductions in dollar value among the six companies listed.

Voters approve restrictions on data center development

Voters in 10 states decided on 41 ballot measures concerning data centers on Election Day. All but one of these measures resulted in support for bans or restrictions on development. Democratic candidates campaigned on these measures, citing grid capacity and local infrastructure concerns.

Texas faces significant impact, as it hosts 248 planned data centers. Governor-elect Gina Hinojosa pledged to halt new authorizations for these projects until officials enact new legislation.

Political reactions to the market crash

OpenAI's Greg Brockman said, "Nobody has really seen something like this in U.S. politics," regarding the tech sector's reaction to local opposition. Donald Trump attributed the $3 trillion one-day market decline to the success of the Democratic Party in the midterm elections.

Trump wrote on Truth Social that the country took a "giant step back in History" and described the market as a "ROCKETSHIP" during his own administration. He also linked the market's performance to his administration's stance on the Iranian nuclear program. Trump later wrote on Truth Social that the "Dumocrats" had a "big Tuesday" and reaffirmed his commitment to accelerating AI development.

Democratic gains in the midterm elections provide the party with opportunities to investigate the Trump administration, scrutinize federal spending, and challenge current policies. The Times of India noted that Trump retains veto power, which Congress can only override with a two-thirds majority in both chambers.

Broad market indices record significant losses

The Nasdaq 100 fell 6.4 percent on November 5, 2026, marking its largest single-day drop since March 2020. The index lost between $2.3 trillion and $2.5 trillion in value during that session. On the same day, the S&P 500 dropped 3.6 percent, its worst daily performance since the April 2025 Liberation Day tariffs.

The Dow Jones Industrial Average had risen 1,569 points, or 3 percent, on Wednesday before reversing course as the market lost approximately $3 trillion on Thursday. The VIX, a gauge of expected volatility for the S&P 500, rose by 70 percent on November 5.

Broader US equities have declined by approximately $5.7 trillion in market value since peaking on October 6, 2026. The PHLX semiconductor index declined by 12.25 percent. Memory stocks have fallen by an average of 60 percent from their 2026 highs, while AI power stocks have declined by an average of 53 percent. Earlier, on October 23, 2026, the Nasdaq fell 2.6 percent while the Dow Jones Industrial Average experienced a slight increase.

Market stabilization and infrastructure spending plans

Markets stabilized on November 6, 2026, as chip stocks recovered some previous losses. Earlier in November 2026, Intel shares fell approximately 30 percent, and Alphabet shares declined following disappointing financial results.

Amazon, Microsoft, Alphabet, and Meta plan a combined $725 billion in AI infrastructure spending for 2026, which represents a 77 percent increase over the previous year.

Koura founder Rupert Carlyon said markets have been on edge for a long time, which magnified bad news, though core businesses at Google and Amazon still grow 10 to 20 percent per year. Milford portfolio manager Andrew Curtayne said AI models improve monthly and revenues are rising in unprecedented ways. Simplicity founder Sam Stubbs said portfolios remain well-diversified with meaningful New Zealand allocations and that big tech companies maintain strong cash flows.

PayPal reported $1.5 billion in buybacks for the third quarter of 2026, retiring 28 million shares. CEO Enrique Lores implemented a cost-savings initiative to generate more than $1.5 billion annually. PayPal scheduled a quarterly dividend payout of $0.14 per share for December 24, 2026.

KiwiSaver funds held $155.1 billion in total assets as of June 2026, an 18 percent increase from the previous year. Approximately 44 cents of every KiwiSaver dollar stays invested in foreign shares. Growth funds represent 49 percent of KiwiSaver funds under management, or $68 billion. High-volatility risk category 5 funds grew from $6.8 billion in 2021 to $51.5 billion in 2024. Tech weightings in top-10 holdings reach 26 percent in Milford’s aggressive fund, 22.5 percent in Generate, 21.6 percent in Quay Street High Growth, 20.16 percent in Kernel, and 19.4 percent in Simplicity High Growth. KiwiSaver covers approximately 3.4 million members, or about 63 percent of the New Zealand population.