US semiconductor stocks experienced a significant decline on Thursday as concerns over inflation, rising borrowing costs, and debt related to artificial intelligence (AI) infrastructure negatively impacted investor sentiment. Nvidia’s shares fell by 2%, while Advanced Micro Devices (AMD) saw a 4% drop, contributing to a broader sell-off in the chip sector.
Memory-chip manufacturers also faced losses. SanDisk’s shares decreased by 6% after a 5% fall in the previous session. Similarly, Micron and South Korea’s SK Hynix saw their stock values decline. The increasing competition from Chinese chipmakers further exacerbated the concerns surrounding the semiconductor industry.
Taiwan Semiconductor Manufacturing Company (TSMC), recognized as the world’s largest contract chipmaker, reported a 4% drop in shares despite strong earnings and continued demand for AI chips. This decline underscored investor worries about the broader market outlook, even with the persistent demand for semiconductor technology.
The fear of continued inflation has led to speculation that the US Federal Reserve might maintain elevated interest rates for an extended period, thus increasing financing costs for companies heavily investing in AI infrastructure. These higher borrowing costs could pressure businesses that depend on debt to support data centers and computing capacity.
CoreWeave, an AI infrastructure provider, also felt the impact as rising bond yields intensified concerns over its debt-laden balance sheet, resulting in a 7% drop in shares on Thursday, following a more than 16% decline the previous day.
Overall, the market downturn reflects growing scrutiny from investors regarding the financial sustainability of AI-related investments. Despite a strong demand for advanced chips, the combination of higher financing costs and economic uncertainty continues to weigh heavily on technology stocks.