Wall Street's AI trade took another heavy hit on Thursday, November 5, as semiconductor shares tumbled and investors reconsidered the enormous cost of building artificial intelligence infrastructure. Nvidia was among the biggest casualties, with its shares falling sharply as concerns about AI spending, corporate earnings and political opposition to data centre construction converged. The decline comes despite the company's strong financial performance and substantial demand for its AI computing products. For Canadian investors with exposure to US technology stocks, the sell-off highlights the growing tension between impressive business growth and the price investors are willing to pay for it.
What Moved
Nvidia shares fell 6.3% in Thursday morning trading, according to BNN Bloomberg, making the company the heaviest drag on the S&P 500. The decline followed another 3.2% drop on Wednesday, extending pressure on AI-related equities.
NBC News reported that Nvidia lost approximately 7% during Thursday's trading, describing it as the company's largest one-day decline since April 2025. The different percentages reflect separate reporting snapshots rather than necessarily representing the same measurement period.
The pressure extended well beyond Nvidia. Advanced Micro Devices dropped 13.1%, while CoreWeave declined 10%. Qualcomm and Arm Holdings also suffered significant losses following earnings reports that investors viewed as mixed.
The broader market weakened alongside technology shares. BNN Bloomberg reported a 2% decline in the S&P 500 and a 3.6% fall in the Nasdaq Composite during morning trading. Meanwhile, the Dow Jones Industrial Average was down 502 points.
Why It Moved
The immediate catalyst was renewed concern about whether the enormous investment in artificial intelligence will generate sufficient financial returns. Technology companies have committed hundreds of billions of dollars to chips, computing infrastructure and data centres. Investors are increasingly scrutinizing whether the resulting productivity improvements and revenue growth can justify those expenditures.
Two earnings reports helped trigger Thursday's selling. Qualcomm and Arm Holdings released results on Wednesday evening that investors generally considered mixed. Their performances reinforced concerns about the financial expectations attached to the semiconductor industry.
Political developments added another source of uncertainty. Democratic victories in Tuesday's US midterm elections raised the possibility of tighter restrictions on data centre construction. Several Democratic candidates who won gubernatorial, Senate, House and attorney general races had pledged to slow or halt new AI data centre projects.
Texas, Ohio, Michigan and Georgia attracted particular attention because of their importance as data centre markets. Any restrictions affecting construction could influence the pace of infrastructure investment and, consequently, demand for the hardware supplied by Nvidia.
However, the current market pressure contrasts with Nvidia's reported operating performance. A November 4 report published by The Globe and Mail highlighted strong second-quarter fiscal 2027 results, including revenue of $96.22 billion, up 106% year over year.
The company's Data Center business generated $89.02 billion, an increase of 117%. Those figures illustrate why the investment debate is complicated: demand remains substantial, but investors are questioning how much future growth is already reflected in technology stock valuations.
The Numbers That Matter
Several figures help explain the difference between Nvidia's business performance and its recent stock-market weakness.
- 6.3%: Nvidia's reported Thursday morning decline, according to BNN Bloomberg.
- 15%: The approximate decline in Nvidia shares over the previous three months, according to NBC News.
- $96.22 billion: Nvidia's second-quarter fiscal 2027 revenue, representing 106% annual growth.
- $89.02 billion: Data Center revenue, up 117% year over year.
- 75%: Non-GAAP gross margin in the reported quarter, compared with 72.5% a year earlier.
- $108 billion: Management's revenue guidance for the third fiscal quarter, plus or minus 2%.
Valuation is another important part of the discussion. A Zacks Investment Research report published through The Globe and Mail on November 4 placed Nvidia's forward 12-month price-to-earnings ratio at 14.26, below the Computer and Technology sector average of 17.80.
That comparison also showed a substantial gap with semiconductor competitors. Intel traded at 30.33 times forward earnings, Marvell Technology at 26.00 and AMD at 33.31. Nvidia's reported year-to-date share gain was 8.4%, compared with 62.6% for Intel, 101.7% for Marvell and 118% for AMD.
These comparisons suggest that Nvidia's recent underperformance has reduced its relative valuation. However, a lower earnings multiple does not automatically mean a stock is undervalued. Investors must also consider the possibility that earnings expectations, competition and future AI spending could change.
- Forward P/E ratio
- A valuation measure comparing a company's share price with its expected earnings over the next 12 months.
- Gross margin
- The proportion of revenue remaining after the direct costs associated with producing goods and services.
- Data Center revenue
- Revenue generated from products and services supporting computing infrastructure, including AI workloads.
What Analysts Are Watching
The central question is whether the AI infrastructure investment cycle can continue at its current pace. Nvidia's financial results point to strong demand, but the market is increasingly focused on the returns customers can generate from their spending.
The company's product pipeline offers another important consideration. Its Blackwell platform remains in strong demand, while the next-generation Vera Rubin platform provides an additional potential source of growth. The November 4 report said production shipments of Vera Rubin began in August and that management expected the platform to contribute approximately 20% of Data Center revenue in the third quarter.
Supply constraints also matter. Nvidia's supplier commitments reached $279 billion at the end of the second quarter, reflecting substantial procurement requirements, particularly for memory. These commitments support production capacity but also demonstrate the scale of resources needed to satisfy customer demand.
For Canadian investors, currency exposure adds another consideration when holding US-listed Nvidia shares. Changes in the US dollar relative to the Canadian dollar can affect the Canadian-dollar value of an investment, independently of movements in Nvidia's share price.
The wider Canadian market has also experienced shifting sentiment. On November 2, the S&P/TSX Composite Index gained 0.5%, supported by a 2.3% increase in its materials sector, even as US technology shares faced pressure. This illustrates how different sector exposures can produce different results across North American markets.
What Happens Next
Investors will be watching upcoming corporate earnings and further evidence of demand for AI infrastructure. Nvidia's third-quarter revenue guidance of $108 billion, plus or minus 2%, provides an important benchmark against which its next financial results can be assessed.
Market participants will also be looking for clearer indications of how the US election results could affect data centre construction. The possible impact of state and federal policy decisions is particularly relevant to companies supplying the equipment needed for large-scale AI computing.
Meanwhile, Nvidia's ability to deliver Blackwell and Vera Rubin products, manage supply commitments and maintain profitability will remain central to its investment outlook.
The immediate challenge for the stock is not simply whether AI demand exists. Its recent financial results demonstrate that demand is substantial. The bigger question is whether spending growth, customer returns and future earnings can keep pace with the expectations that have supported the AI rally.
Frequently Asked Questions
Why did Nvidia stock fall on November 5, 2026?
Nvidia shares declined amid concerns about AI infrastructure spending, mixed semiconductor earnings and possible restrictions on data centre construction following Democratic victories in US midterm elections.
How much did Nvidia stock drop on November 5?
BNN Bloomberg reported a 6.3% decline during Thursday morning trading. NBC News separately reported an approximately 7% one-day decline.
Is Nvidia stock undervalued compared with other semiconductor companies?
A November 4 Zacks report placed Nvidia's forward P/E ratio at 14.26, below the sector average of 17.80 and the reported multiples for Intel, Marvell Technology and AMD. This valuation comparison does not guarantee future share-price gains.
Is Nvidia still growing despite the stock market sell-off?
Yes. Its second-quarter fiscal 2027 revenue reached $96.22 billion, up 106% year over year, while Data Center revenue increased 117% to $89.02 billion.
How does Nvidia's stock decline affect Canadian investors?
Canadian investors holding Nvidia shares or funds with significant Nvidia exposure may experience losses when the stock falls. US-dollar exchange-rate movements can also affect investment values measured in Canadian dollars.