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- 01On November 5, 2026, the S&P 500 fell 4.4% and the Nasdaq composite dropped 5.5%, leading to a loss of approximately $2.5 trillion in value, primarily due to concerns over AI data center construction and rising borrowing costs.
- 02A survey by West Monroe indicated that 74% of enterprise buyers now allocate more than 10% of their IT budgets to AI, a significant increase from 23% in 2025.
- 03The sell-off was influenced by election results that raised concerns about potential pauses in data center construction due to voter wariness about AI and associated costs.
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- 04Most technology leaders are responding to rising AI costs by increasing budgets, consolidating vendors, and cutting spending in other areas, with employee productivity and AI assistants being top priorities for 60% of buyers.
- 05Lenders have become cautious about financing AI infrastructure deals, with some banks hesitating to support new projects following the market downturn.
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Investors sold off AI stocks on November 5, 2026. The S&P 500 fell 4.4%, its worst day since April 2025, and the Nasdaq composite dropped 5.5%, the Associated Press reported.
Nvidia fell 9.3% and was the heaviest drag on the S&P 500, while AMD fell 17.3% and CoreWeave fell 9.8%. The Nasdaq-100 lost about $2.5 trillion in value, according to Reuters.
On the same day, consulting firm West Monroe released a survey showing that corporate AI budgets have grown sharply over the past year. Among enterprise buyers, 74% now allocate more than 10% of their IT budgets to AI, up from 23% in 2025.
What Triggered the Sell-Off
The sell-off was led by stocks tied to the buildout of AI data centers. Investors were concerned that data center construction could slow because borrowing costs have risen, and some critics argued that AI stock prices had reached bubble levels, according to the AP.
Election results added to the pressure. Democratic gains in the November 3 midterm elections raised the possibility that governments could pause data center construction, as voters expressed wariness about AI and about higher power bills linked to data centers, the AP reported.
The losses erased the previous day's gain, which had been the market's best in three months.
Where Corporate AI Budgets Stand
West Monroe's report, titled "The New Rules of Enterprise Software & AI Spend," is based on an online survey of 300 US executives conducted in the third quarter of 2026.
Buyers in the survey work at organizations with at least $100 million in annual revenue, and sellers work at technology and software companies with at least $30 million in annual revenue.
"AI is already a budget decision, but buyers and sellers are moving at different speeds," said Dhaval Moogimane, senior partner and software industry lead at West Monroe.
Most technology leaders said their main response to rising AI costs is to increase budgets to meet demand, according to CIO Dive's coverage of the survey.
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Other responses include consolidating vendors, cutting spending in other areas and reducing the number of software seats.
Employee productivity and AI assistants are the top near-term priority for 60% of buyers. On how they acquire AI, 42% of buyers say they primarily buy AI solutions rather than build them, while only 22% of sellers believe customers primarily buy.
Buyers and Sellers Move at Different Speeds
The survey also found differences in how buyers and vendors expect AI to be priced. Buyers prefer predictable models, with 33% favoring enterprise subscriptions and 24% favoring usage-based pricing.
Among sellers, 36% think buyers prefer hybrid pricing that includes outcome-based components. Software providers also see demand growing faster than buyers expect their budgets to grow, according to CIO Dive.
"Buyers are funding practical use and foundational capabilities, while sellers are already looking toward an agent-led future," said Bret Greenstein, chief AI officer at West Monroe.
Lenders Turn Cautious
The pullback in markets has extended to credit. Some banks that backed AI infrastructure deals weeks earlier now say they would hesitate to finance more, with the caution most pronounced for neoclouds, according to Reuters reporting cited by TheStreet.
Lenders are examining service obligations and exit conditions that allow large technology customers to reduce or end their commitments.
The yield on CoreWeave's notes due 2032 rose above 16%, CNBC reported. Nebius dropped plans for a high-yield bond in October and took a one-year, $3.5 billion loan from Citi with a margin that steps up every 90 days.
West Monroe's survey was conducted before the sell-off, and did not measure whether companies plan to change their AI budgets in response to market conditions.
For now, its findings describe companies that had already made AI a larger part of their technology spending before the market turned.
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