❯ Nasdaq 100 falls more than 6% as investors sell chips, Tesla and SpaceX

The AI trade retreats togetherThe Nasdaq 100 fell more than 6% on November 5 in New York, losing about $2.3 trillion in market value, while the Philadelphia Semiconductor Index dropped roughly 12%, Yahoo Finance reported. The Nasdaq Composite declined about 5.5% and closed at least 10% below a recent high, entering correction territory. Chips and AI infrastructure were at the center of the selling.

Tesla and SpaceX also come under pressureTesla and SpaceX each fell more than 9% during the session. Investors worried that changes in Congress and some state governments could complicate the policy environment for data-center expansion. Selling also spread to software and infrastructure businesses tied to AI investment expectations, as investors reduced exposure across connected assets.

Policy concerns combine with profit-takingThe decline followed the post-election rally on November 4. Nomura cross-asset strategist Charlie McElligott attributed the unwinding of popular themes to hedge funds racing to protect their annual gains. Changing policy expectations and profit-taking placed simultaneous pressure on stocks supported by similar investment narratives, with market moves reflecting positioning, fund flows and expectations for company performance.

Investors recalculate when expansion pays offAI revenue chains are interconnected. Powering a facility enables server installation, servers enable model-serving capacity, and customer usage generates continuing revenue. Greater uncertainty over project schedules forces investors to reassess when that revenue arrives and how much funding companies need in the meantime.

▮ SIGNALWhen several industries share the same AI expansion expectations, changes in opening dates and funding costs transmit risk across chips, cloud services and model businesses.