Mike Novogratz Warns Nasdaq Could Plunge 30% in an ‘AI Catastrophe’ — Here’s Why He Still Expects the Data Center Boom to Continue

Galaxy Digital Inc. (NASDAQ:GLXY) CEO Mike Novogratz warned that stopping the artificial intelligence data-center buildout would slow the U.S. economy, while saying a hypothetical "AI catastrophe" could send the Nasdaq crashing.

Data Centers Are Holding Up the Economy

Speaking on the ‘All Things Markets’ podcast with SkyBridge Capital founder Anthony Scaramucci, released on Thursday, Novogratz was asked about BlackRock Inc. (NYSE:BLK) CEO Larry Fink’s warning that a data center moratorium could spark a recession.

Novogratz agreed the economy leans heavily on AI spending, but said he isn’t sure that stopping the buildout would bring a recession.

He doesn’t expect the buildout to stop, but said that if it did, “you’re going to see a slowdown” in the economy.

Novogratz also warned of the downside: “I think if there was a catastrophe, an AI catastrophe, Nasdaq would be down 30%.”

AI Financing Is Pressuring Yields

Fink estimated that the U.S. would need “$7 to $9 trillion over the course of a number of years” for power and data centers.

Competition between private capital and record government borrowing, he said, means “structurally higher interest rates for longer.”

The biggest spenders are already borrowing heavily.

Five of the biggest hyperscalers issued roughly $200 billion of investment-grade debt in the first half of 2026, almost twice that of all of 2025, according to iShares.

Novogratz said a hotter-than-expected “ugly” inflation print, the Federal Reserve’s interest rate hikes, and heavy hyperscaler funding have left fixed income uncertain, and “it looks like that’s finally kicked the equity market in the stomach.”

A Chip Rout Brings Bonds Relief

Chip stocks bore the brunt this week, and the iShares Semiconductor ETF (NASDAQ:SOXX) fell 0.91% to $514.71 on Thursday, while the Nasdaq Composite eked out a 0.076% gain.

Bond yields eased from their highest levels in decades, with a drop in chip stocks steering investors into Treasuries and doing what months of Treasury Department buybacks could not.

At the time of writing, the 10-year yield was 5.100%, down from a 24-year high of 5.36% last week, while the 30-year yield was 5.443%, down from 5.73%, its highest level since 2002.

Price Action: The State Street SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.28% higher on Thursday at $771.79 and rose 0.21% in early pre-market trading on Friday. Meanwhile, the Invesco QQQ Trust closed 0.13% lower at $728 and climbed 0.13% in early hours.

Benzinga Edge rankings indicate the Invesco QQQ Trust has a Momentum score in the 78th percentile.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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