Tech Stocks Recover Ground After AI Investment Fears Trigger Global Selloff

The selloff began with a reassessment of the AI spending boom after Democrats' sweeping victories in the US midterm elections. Investors feared that tougher regulation could slow the expansion of data centres, according to Reuters.

That concern hit a market whose gains had depended heavily on AI. The Next Web reported that investors pulled back from chipmakers, cloud providers and power companies that had driven much of this year's advance.

The risk was about future spending, not an announced collapse in investment. According to NDTV, UBS analysts estimated that around 30 per cent of expected US data centre capacity additions in 2028 could be at risk.

On November 5, the tech-heavy Nasdaq lost $2.5 trillion in market value as investors rushed to sell technology stocks, CNN reported. Fears that the election results could slow the AI buildout were a central driver.

By November 6, the selling had spread overseas. Euronews described the worst US chip selloff since 2020 and reported that Asian technology shares were falling as investors assessed the prospect of tougher rules.

South Korea's benchmark index fell more than eight per cent, with trading temporarily suspended, according to n-tv. European shares also fell, while investors sought the safety of bonds, Global News reported.

US stocks then recovered some ground on November 6. The Nasdaq and S&P 500 rose as chip shares bounced back, but major indexes still finished the week lower, according to Investopedia. The Financial Times described the recovery as tepid compared with historic rebounds after severe selloffs.

By November 8, Asian investors were preparing for further volatility. Bloomberg Technology reported that hedge funds were cutting exposure while uncertainty persisted over US data centre policy.

On November 9, Asian markets and US equity futures made a steadier start, according to CNA. Taiwanese shares rallied after authorities announced measures intended to restore investor confidence following the longest selling streak since 2022, Bloomberg Technology reported.

Technology shares were recovering some of the previous week's losses on Monday, Euronews reported. That is a partial recovery, not a reversal of the damage: the Financial Times reported that last week's declines had pushed many Asian indexes into bear market territory.

The central unresolved issue is whether US policy will actually curb data centre expansion enough to change AI spending plans. Company executives are offering a more optimistic view: CNBC reported that executives from OpenAI, Arm and Qualcomm largely projected continued growth despite the selloff.

Upcoming economic data and earnings are also in focus, according to CNBC. Traders are watching a probe into Nvidia boss Jensen Huang, Euronews reported, though the supplied coverage gives no details about its scope.