U.S. semiconductor stocks experienced a downturn on Thursday amid investor concerns over persistent inflation, rising borrowing costs, and debt associated with artificial intelligence (AI) infrastructure. Nvidia’s shares dropped by 2%, while Advanced Micro Devices (AMD) saw a 4% decline, contributing to a broader sell-off in the chip sector.
Memory-chip manufacturers were also hit hard, with SanDisk shares falling 6% following a 5% decline in the previous session. Micron and South Korea’s SK Hynix also saw their stock prices move lower. The increasing competition from Chinese chipmakers has further intensified worries within the semiconductor industry.
Taiwan Semiconductor Manufacturing Company (TSMC), recognized as the world’s largest contract chipmaker, reported a 4% drop in its shares despite posting strong earnings and benefiting from sustained AI chip demand. This decline underscores investor apprehensions about the overall market outlook, even as demand for semiconductor technology remains robust.
Inflation concerns have led to speculation that the U.S. Federal Reserve may maintain higher interest rates for an extended period, elevating financing costs for companies heavily investing in AI infrastructure. The prospect of increased borrowing costs poses a challenge for businesses reliant on debt to support data centers and computing capacity.
AI infrastructure provider CoreWeave also faced selling pressure, with its shares plummeting as much as 7% on Thursday, following a more than 16% drop in the previous session. This reflects heightened investor scrutiny over the financial sustainability of AI-related investments amid rising bond yields and economic uncertainty.
The market’s response highlights the growing investor attention to the financial viability of AI investments, as higher financing costs and economic unpredictability continue to weigh on technology stocks despite strong demand for advanced chips.