U.S. semiconductor stocks experienced a notable decline on Thursday as persistent inflation concerns and rising borrowing costs, particularly linked to artificial intelligence (AI) infrastructure, weighed heavily on investor sentiment. Industry giants like Nvidia and Advanced Micro Devices (AMD) saw their shares drop by 2% and 4%, respectively, contributing to a broader sell-off within the chip sector.
Memory-chip manufacturers were not spared from the downturn. SanDisk shares plummeted 6%, building on a 5% decline from the previous session, while Micron and South Korea’s SK Hynix also recorded losses. The semiconductor industry is facing added pressure from increasing competition from Chinese chipmakers, further dampening investor confidence.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, also saw its shares fall by 4%, despite reporting robust earnings driven by strong demand for AI chips. This decline underscores investor concerns about the overall market outlook, even as demand for semiconductor technology remains high.
The specter of inflation has raised fears that the U.S. Federal Reserve might maintain elevated interest rates for a longer period, which would increase financing costs for companies investing heavily in AI infrastructure. Higher borrowing costs pose a challenge for businesses reliant on debt to expand data centers and computing capacity.
AI infrastructure provider CoreWeave similarly faced selling pressures, with its shares dropping as much as 7% on Thursday, following a 16% decline in the previous session. Rising bond yields have intensified concerns about the company’s debt-heavy balance sheet.
The market’s downturn reflects growing scrutiny from investors regarding the financial sustainability of AI-related investments. Despite the ongoing strong demand for advanced chips, higher financing costs and economic uncertainties are impacting technology stocks.