U.S. semiconductor stocks experienced a notable decline on Thursday as concerns over persistent inflation, rising borrowing costs, and debt associated with artificial intelligence (AI) infrastructure affected investor sentiment. Shares of Nvidia fell by 2%, while Advanced Micro Devices (AMD) saw a 4% drop, contributing to a broader sell-off across the chip sector.
Memory-chip makers were not spared, with SanDisk shares decreasing by 6% following a 5% fall in the previous session. Micron and South Korea’s SK Hynix also recorded losses. The industry faces increasing competition from Chinese chipmakers, adding to the existing concerns.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, experienced a 4% share decline despite reporting strong earnings and continued demand for AI chips. This dip underscores investor apprehensions about the overall market outlook, overshadowing the ongoing demand for semiconductor technology.
The fear of inflation has raised expectations that the U.S. Federal Reserve might maintain elevated interest rates for an extended period, thereby escalating financing costs for companies heavily investing in AI infrastructure. Such higher borrowing costs could strain businesses that depend on debt to fund data centers and computing capacity.
AI infrastructure provider CoreWeave also faced market pressure, with its shares dropping by as much as 7% on Thursday, after a decline exceeding 16% the previous day. Rising bond yields have heightened concerns about its debt-heavy balance sheet.
This market downturn reflects growing investor scrutiny over the financial sustainability of AI-related investments. Despite strong demand for advanced chips, increased financing costs and economic uncertainty are weighing heavily on technology stocks.