KUALA LUMPUR: The Nasdaq Composite plunged 5.5%, wiping out an estimated US$2.5 trillion (RM10.15 trillion) in market value, as concerns over artificial intelligence (AI) infrastructure spending and tighter financing conditions weighed heavily on technology stocks.
The decline marked the index's steepest single-day fall since April 2025, pushing it nearly 12% below its October 6 record closing level and into correction territory.
According to Reuters, the sell-off was driven partly by concerns that the Democrats' sweeping victories in the US midterm elections could lead to greater scrutiny of AI infrastructure expansion, particularly large-scale data centre projects.
"The big election outcome was, especially with the Democrats winning a lot of the governorships, that the slowdown of the data center buildout is the real key theme that's going to stick," said Michael O'Rourke, chief market strategist at JonesTrading.
Semiconductor and cloud infrastructure stocks bore the brunt of the selling. The Philadelphia Semiconductor Index fell 12%, reaching its lowest level in more than six months, while Nvidia declined 9% and Advanced Micro Devices slumped 17%.
Investors have also grown increasingly concerned about the funding requirements of data centre projects, particularly among smaller cloud computing providers such as Nebius and CoreWeave, amid higher interest rates and tighter financial conditions.
The market downturn has also raised questions over the timing of Anthropic's anticipated initial public offering, as heightened volatility could complicate its listing plans.
The weakness extended into Asian markets, with Japan's Nikkei and South Korea's Kospi coming under pressure following the US technology sell-off. Both indices had gained more than 20% this year.
Meanwhile, Wall Street's CBOE Volatility Index, a gauge of expected market volatility, recorded its largest increase since December 2024.
The latest rout underscores growing investor scrutiny of AI-related valuations, capital expenditure and the sustainability of the sector's rapid expansion.