Nasdaq Falls Into Correction as AI Selloff Erases Nearly $2 Trillion

The Nasdaq has dropped into correction territory after its worst trading day in 19 months, as investors bet on a slowdown in artificial intelligence spending. Nearly $2 trillion was shaved off the index's value, with worries over curbs to AI datacenters rippling across global bourses.

The selloff followed the Democrats' election triumph, which prompted investors to reassess the outlook for AI infrastructure spending. The scale of the decline — the sharpest single-day fall in 19 months — marked a significant shift in sentiment for a market that had been powered by enthusiasm for artificial intelligence.

The correction designation means the Nasdaq has fallen at least 10% from its recent peak, a threshold that typically signals a change in market psychology. The move erased nearly $2 trillion in value from the index, underscoring how concentrated the market's gains had become around AI-related names.

With the index now in correction territory, attention turns to what typically happens next after such declines. Historical patterns suggest corrections can be followed by either further weakness or a recovery, depending on the underlying drivers. In this case, the trigger is a reassessment of AI spending rather than a broad economic shock, which may shape how the market digests the move.

For investors, the correction highlights the risks of a market heavily reliant on a single theme. The coming sessions will be watched for signs of whether the AI-related selling pressure persists or stabilizes, with the magnitude of the decline — nearly $2 trillion — underscoring the stakes for portfolios heavily weighted toward technology stocks.