U.S. semiconductor stocks suffered their steepest selloff in years on Nov. 5 as traders reassessed whether mounting political resistance to data-center construction could slow the AI infrastructure buildout that has driven demand for chips, memory, networking equipment and power-intensive computing capacity.
The Philadelphia Semiconductor Index fell 12%, its largest one-day decline since 2020, according to ICE Data Indices. The Nasdaq Composite dropped 5.52%, while the Nasdaq 100 lost about 6.4% and the S&P 500 declined 4.35%, based on closing index data. The rout erased an estimated $2.5 trillion to $3.2 trillion from U.S. equity values, depending on the market coverage used in the calculations cited in the material.
Chip and storage companies were hit especially hard. Nvidia fell 9.26%, AMD dropped 17.26%, Micron declined 17.46%, SanDisk lost 22.26%, and Western Digital fell 17.35%. The pattern placed the most pressure on companies whose revenue is closely tied to the rapid expansion of AI servers and the storage systems surrounding them.
The selling followed a series of local U.S. referendums targeting data-center projects. Redbud Consulting, which tracks local data-center policy measures, counted 44 measures intended to restrict such construction and said 38 passed. Another tally cited in the material counted 41 measures, with 40 approved. Exit polling referenced in the reports showed 76% of voters opposed data centers in their communities.
Local limits raise questions for AI spending
The votes do not automatically halt all data-center construction, and their legal scope varies by jurisdiction. Yet they add a new political constraint for cloud providers and developers that have been racing to secure land, electricity connections and permits for large computing campuses.
Local opposition has centered on electricity demand, water use, land use and grid capacity. The International Energy Agency estimated that data centers, artificial intelligence and cryptocurrency together consumed about 415 terawatt-hours of electricity globally in 2024. The agency expects data-center electricity demand to rise sharply through 2030, with AI workloads becoming a major driver.
The United States accounts for roughly 45% of global electricity use tied to data centers, according to the figures cited in the supplied material. That concentration means regional permitting decisions can affect projects far beyond the communities where the facilities are proposed. A delay in a large U.S. campus can alter orders for servers, GPUs, memory, optical components, networking gear and power equipment across an international supply chain.
Goldman Sachs economist Jan Hatzius estimated that a construction pause could affect roughly 45% of planned data-center projects, according to the material. The estimate reflects potential exposure rather than a confirmed cancellation rate, but it helps explain why storage and memory stocks fell more sharply than many software names. Those products are generally purchased late in the process of equipping a data center, leaving them sensitive to changes in project timelines.
Senator Bernie Sanders called for an immediate national pause on data center construction in a social-media post after the local votes. The material did not cite legislation or a committee filing tied to that proposal. A federal pause would face a far more complicated path than local ballot initiatives, particularly because data-center development also intersects with energy policy, local zoning powers and national industrial policy.
Bitcoin and crypto-linked shares fall with technology stocks
Bitcoin declined alongside high-growth technology equities, closing Nov. 5 at $75,640, down 5.95% from $80,428 the previous day, according to the price figures in the material. It later traded near $76,088 during Asian hours on Nov. 6.
The move reinforced Bitcoin's recent sensitivity to sharp shifts in risk appetite, particularly when the selloff begins in technology shares. U.S.-listed crypto-related stocks also weakened: Coinbase fell 9.69%, Robinhood lost 10.32%, and Strategy dropped 9.29%.
Crypto mining and AI data centers compete for some of the same power resources, though their business models and infrastructure needs differ. A tighter permitting environment would place additional value on sites that already have secured power contracts, grid connections and approvals. It could also intensify competition for available electricity in regions that have become hubs for both data-center operators and digital-asset mining companies.
Gold and oil moved in the opposite direction. Gold gained 0.99% on Nov. 5 after rising 3.37% the previous session, while WTI crude added 2.72% following an 8.29% drop a day earlier. The 10-year U.S. Treasury yield eased about five basis points to 4.837%, while the dollar index was little changed near 101.49.
Early rebound leaves uncertainty intact
Several of the hardest-hit U.S. chip stocks recovered part of their losses in after-hours trading. By 8:40 a.m. Beijing time on Nov. 6, Micron had risen 5.1%, SanDisk gained 4.8%, AMD added 4.4%, and Nvidia was up 2%. Nasdaq 100 futures were higher by roughly 0.4%, while the QQQ ETF had gained 0.93% from its Nov. 5 close.
The rebound suggested that some of the selling reflected rapid position-cutting after an unusually severe session. It did not resolve the central question facing the AI hardware market: whether cloud companies will preserve their capital-spending plans if local opposition makes construction slower, more expensive or less predictable.
Asian equities delivered a mixed response. Hong Kong's Hang Seng Index rose 3.67% and the Hang Seng Tech Index climbed 5.55%, with turnover reaching HK$356.667 billion, up 50.56% from the previous session. NetEase, Li Auto, Xiaomi, Alibaba and Tencent posted strong gains, while hardware-linked companies Kingboard Laminates and Yangtze Optical Fibre and Cable fell more than 12%.
Company earnings also created sharp divergences beneath the broader market decline. AppLovin reported third-quarter revenue of $2.185 billion, up 55% from a year earlier, and adjusted EBITDA of $1.84 billion. Its shares rose 31.04% during Nov. 5 trading. Cloudflare reported third-quarter revenue of $782.5 million, up 39% year over year, and its shares rose 15.1% after hours despite falling 8.03% during the regular session.
Those results underline that the Nov. 5 rout was concentrated rather than universal. The market's immediate concern was not technology earnings in general, but the possibility that physical limits on power-hungry computing infrastructure could disrupt the spending cycle behind the AI hardware boom.
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