An AI stock selloff on Thursday pushed the Nasdaq Composite into correction territory. On Friday, chip shares bounced back as investors weighed a strong US jobs report. The sharp swings show how nervous markets have become about the financing and economics behind the artificial intelligence boom.
What Happened in the AI Stock Selloff
The Nasdaq Composite fell 5.5% on Thursday to close at 24,315.00, more than 10% below its recent record high. Wall Street defines a drop of that size as a correction. The S&P 500 lost 4.4% to 7,353.73, and the Dow Jones Industrial Average fell 3.4% to 51,523.06, a decline of more than 1,800 points.
CNBC described it as the Nasdaq’s worst day in 19 months. CNBC TV18 reported that all three major US indexes recorded their steepest single-day losses since April 2025. All 11 sectors in the S&P 500 closed lower, but companies tied to the AI build-out led the decline.
Micron Technology fell 17% on Thursday. Investing.com reported that the Nasdaq 100 dropped by as much as 6% at one point during the session.
Why Investors Sold
No single event explained the rout. Technology analyst Luke Lango said there was no one new headline behind the drop. Several concerns appeared to build at once.
Investing.com reported that selling accelerated on Wednesday after Bloomberg reported growing concerns at Microsoft about so-called neocloud companies. These firms supply computing capacity to large technology companies and have taken on heavy borrowing to build it. Delays, regulatory obstacles and high costs have complicated their business models, Investing.com said.
CNBC’s Investing Club linked the drop to concerns after the midterm elections that the buildout of data centers could slow. Reuters reported separately that Democrats are planning a flood of AI bills once they take control of Congress.
Bloomberg also reported Thursday that hedge fund Walleye Capital plans to return part of its capital to clients. Investing.com noted that returning capital does not by itself signal distress, but it added to a defensive mood.
A Shaky Start to the Month
The market was already under pressure. The Nasdaq 100 fell about 3.5% last Friday, and the Nasdaq Composite dropped 1.07% on Monday to 25,164.32. The S&P 500 closed that day at 7,541.40, according to CNBC.
Friday’s Rebound
Buyers returned to beaten-down AI and semiconductor stocks on Friday. Nasdaq 100 futures rose 1.6% before the opening bell, according to CNBC TV18. In premarket trading, SanDisk rose 9.6%, Astera Labs 8.1%, Lumentum 8.55% and Micron 8.2%, CNBC reported.
Yahoo Finance reported that Nvidia, AMD and Micron led the chip sector higher. CNBC said the Nasdaq was up 1.9% and the S&P 500 up 1% at one point, while the Dow remained slightly lower.
The October jobs report arrived at the same time. Payrolls rose by 165,000, far above forecasts, and Treasury yields climbed. Reuters reported that traders increased their bets on a Federal Reserve rate increase in December. Higher yields can weigh on technology valuations, so investors were watching how stocks reacted.
Gains were not universal. Yahoo Finance described the market as mixed at the open as investors looked for signs of stabilization.
Broader Context: Funding the AI Buildout
The selloff has put a spotlight on how AI infrastructure is paid for. Reuters reported Friday that US investment-grade corporate bond issuance reached a record $1.88 trillion this year, driven by Big Tech borrowing for AI projects.
Anthropic, the AI developer, filed for an IPO on October 26 and has been reported to be targeting a listing before Thanksgiving. Investing.com quoted Vital Knowledge as saying the selloff raised serious doubts about whether the company could raise about $100 billion at a $1.5 trillion valuation by then. Anthropic has not set formal offering terms.
The Wall Street Journal reported that the Thursday selloff erased about $2.5 trillion from companies in the Nasdaq Composite, according to a summary by the Free Press Journal.
Markets in Asia also felt the pressure. Investing.com reported that Asian stocks fell on Friday, with Japan and South Korea hit by the AI rout.
Investors Choose Caution
Reuters reported a surge in US money market fund inflows, driven by caution over the midterm elections and AI cash burn. Investing.com said investors were increasingly reducing risk rather than rotating into other sectors.
What Happens Next
New US inflation data will be in focus next week, CNBC reported. Hotter readings could add to pressure on rate-sensitive technology shares.
Reuters reported uncertainty over whether Anthropic can begin its investor roadshow during the week of November 9. Any delay or change in valuation would be read closely as a test of appetite for AI financing.
Investors will also watch whether Friday’s chip rebound holds. One strong session does not reverse a 10% correction. The coming days will show whether buyers are returning for the long term or simply covering after a violent drop.
