U.S. semiconductor stocks experienced notable declines on Thursday, driven by investor concerns over persistent inflation, rising interest rates, and the debt associated with artificial intelligence (AI) infrastructure investments. Shares of Nvidia dropped 2%, while those of Advanced Micro Devices (AMD) fell 4%, reflecting a broader sell-off within the chip sector.
Memory-chip manufacturers also faced losses, with SanDisk’s shares plummeting 6% after a 5% decline the previous day. Similarly, Micron and South Korea’s SK Hynix saw their stocks move lower. The semiconductor industry is also grappling with growing competition from Chinese chipmakers, adding further pressure to the market.
Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chipmaker globally, reported strong earnings and continued demand for AI chips. However, its shares still decreased by 4%, underscoring investor apprehensions about the overall market outlook despite robust demand for semiconductor technology.
The fears of inflation have stirred concerns that the U.S. Federal Reserve might maintain elevated interest rates for an extended period, increasing borrowing costs for companies heavily investing in AI infrastructure. Such higher financing costs could impact businesses reliant on debt to fund data centers and computing capabilities.
CoreWeave, an AI infrastructure provider, also encountered selling pressure as rising bond yields intensified worries regarding its debt-laden balance sheet. Its shares dropped as much as 7% on Thursday, following a decline of more than 16% the previous session.
This market downturn highlights the growing scrutiny among investors of the financial sustainability of AI-related investments. Despite ongoing strong demand for advanced chips, higher financing costs and economic uncertainties continue to weigh heavily on technology stocks.
