El-Erian Says Market Overreacts to AI as Nasdaq Hits Correction

El-Erian attributes AI backlash to communication failures

El-Erian noted that public backlash against artificial intelligence was expected because the industry failed to adequately explain how the technology would affect employment and daily life.

He compared the current situation to the history of globalization, arguing that failing to address how benefits and costs are distributed creates a backlash.

Microsoft retreats from Texas AI data center project

Microsoft decided not to extend a contract for 240 megawatts of artificial intelligence data center capacity in Ward County, Texas, with the startup Nscale. The company chose to bypass the expansion project after a prolonged wait for regulatory sign-offs regarding essential energy connections.

Microsoft accounted for approximately 42% of the total contracted value for Nscale before it decided against moving forward with the site managed by Ionic Digital Inc.. Despite pulling out of the Texas expansion and a United Kingdom data center deal last month, Microsoft maintains active contracts with Nscale for projects in Portugal and Norway.

Nscale faces scrutiny following Microsoft decision

Investors now scrutinize Nscale’s $30 billion IPO target due to concerns regarding heavy debt loads and increased regulatory oversight.

While Nscale maintains partnerships with entities like Anthropic PBC, these partners often lack the proven creditworthiness of Microsoft.

Circle shares drop amid mixed analyst sentiment

Circle shares dropped roughly 12% on Thursday, November 5, 2026, putting the stock on track for its worst single-day performance since June.

JPMorgan analyst Kenneth Worthington lowered his price target for Circle to $100 from $110, citing a lower-than-expected tax rate and higher-than-modeled ARC presale revenue while noting a slowdown in the core business. Wells Fargo analyst Jason Kupferberg reduced his price target for Circle to $101 from $115, noting that a renewed contract with Binance is negatively impacting fourth-quarter margins.

TD Cowen cut its price target for Circle to $87 from $92, observing that while USDC circulation has stalled, the Circle Payments Network and Arc blockchain show early traction. Susquehanna analyst James Friedman lowered his price target to $86 from $92, highlighting a 181% quarterly increase in the Circle Payments Network's annualized payment volume to over $41 billion.

Clear Street cut its price target for Circle to $98 from $107.

Circle reports third-quarter financial performance

Circle reported third-quarter revenue of $865 million, which included $182 million from the presale of the Arc blockchain token. This result beat analyst expectations by $76 million. The company earned $0.93 per share, exceeding the $0.42 per share estimate from analysts.

Income on reserves backing USDC fell 8 percent to $658 million. Returns on those reserves declined to 3.5 percent.

McDonald’s shares decline as analysts adjust targets

McDonald’s shares traded 1.4 percent lower on Thursday, November 5, 2026. The stock has declined by more than 11 percent year-to-date.

Political climate impacts AI market sentiment

A Democratic sweep in the mid-term elections cooled enthusiasm for AI infrastructure. Most semiconductor and AI-related stocks fell on Thursday, November 5, 2026. Microsoft stock has gained approximately 12 percent year-to-date. Retail sentiment on Stocktwits remained neutral with normal message volumes.