Nvidia shares surged 7.3% on November 6, reaching $194.90 after a sharp 9.3% drop. The stock recovered as investors weighed concerns about potential data centre restrictions under a Democrat-led Congress. This volatility follows a record high in mid-October, leaving the company with 1.32% gains for the year so far.
Nvidia Corp., the poster child of the artificial intelligence (AI) trade, is attempting a recovery in Friday's trade on November 6, surging 7.3% to an intraday high of $194.90.
The rally comes after a 9.3% plunge in the previous session, marking the stock's biggest single-day decline in nearly two years, as Wall Street grew concerned that a Democrat-led Congress could slow down data centre expansion.
The sharp sell-off also dealt a blow to Nvidia CEO Jensen Huang's wealth, wiping $150.9 billion off his net worthand pushing him down four places to 13th on the wealth rankings, from ninth previously. He was among the biggest wealth losers on the day, alongside SpaceX founder Elon Musk and Oracle co-founder Larry Ellison.
Meanwhile, Nvidia's stock has been reeling under pressure since hitting a record high of $243 in mid-October. The sell-off accelerated following the midterm elections, in which Democrats gained control of both chambers of Congress, fuelling expectations that they could push for tighter restrictions on AI infrastructure and data centre development.
From its record peak, the stock has fallen 25% through Thursday's close, leaving its 2026 gains at just 1.32%. A negative close for the year would mark its first annual decline in three years, following cumulative gains of 1,176% over the previous three years.
Big Tech's AI spending boom faces growing scrutiny
Chip stocks have emerged as some of the biggest beneficiaries of aggressive spending by technology giants to scale up their AI infrastructure. Big Tech companies have been expanding their computing capacity at a blistering pace, with plans to spend more than $740 billion this year, up from approximately $400 billion last year.
However, the massive AI spending spree is also putting pressure on Big Tech's once-enviable cash flows, raising concerns among investors about the sustainability of such investments. Alphabet and Meta both reported cash burn in the September quarter, while Microsoft stood out as an exception, reporting $18.6 billion in cash flow.
Against this backdrop, concerns that Democrats' control of both the House of Representatives and the Senate could lead to tighter restrictions on data centre construction have added to the pressure on stocks linked to AI infrastructure.
Data centres are critical to meeting the growing computing requirements of increasingly sophisticated AI models, making any potential constraints on their expansion a concern for investors betting on the AI boom.
The AI industry has also remained volatile for months amid growing criticism that valuations have climbed too high and that the sector could be heading towards a bubble.
Investors are increasingly questioning whether the hundreds of billions of dollars that major technology companies are pouring into AI data centres will generate sufficient productivity gains and profits to justify such massive investments.
US President Donald Trump has been a strong supporter of the AI industry. However, greater Democratic influence in Congress could pave the way for tighter regulatory scrutiny or restrictions on the sector, adding another layer of uncertainty for companies and investors exposed to the AI infrastructure boom.