US chip stocks fall: Nvidia drops 2%, AMD 4% as inflation and AI debt worries deepen sell-off
Chip stocks fall as inflation worries, rising borrowing costs, AI debt concerns and competition from Chinese chipmakers weigh on Nvidia, AMD and TSMC shares.
US chip stocks experienced a significant decline on Thursday due to growing concerns over inflation, rising debt costs, and the mounting pressure of AI infrastructure spending. Investors were particularly worried about the potential for expensive borrowing to become burdensome, especially for companies heavily invested in artificial intelligence technologies.
Nvidia's shares tumbled by 2%, while Advanced Micro Devices (AMD) saw a more severe drop of 4%. The decline in these companies not only marked the continuation of an overall sell-off in semiconductor stocks across global markets but also contributed to a broader decline in related firms such as SanDisk, which lost 6% following a previous 5% drop.
Micron Technology and South Korean chipmaker SK Hynix also suffered losses, further exacerbating the sell-off in memory-chip stocks. This market-wide downturn was not alleviated by strong earnings and record profits reported by Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest chipmaker. Despite TSMC's impressive performance driven by high demand for AI chips, its shares still experienced a 4% decline on Thursday.
The sell-off was compounded by rising inflation, which heightened fears about the Federal Reserve's future monetary policy decisions. Investors were uncertain about how the central bank would address the situation, particularly with respect to potential higher lending costs. Additionally, concerns surrounding AI infrastructure spending posed further challenges for chip companies.
A particular focus was on Nvidia-backed CoreWeave, a neocloud company providing computing infrastructure for AI-related workloads. A spike in bond yields heightened worries about CoreWeave's debt-heavy balance sheet, and its shares plummeted by as much as 7%, extending a significant decline from the previous session.
The broader concern for the semiconductor industry lies in the sustainability of heavy investment in AI infrastructure amidst mounting debt and rising borrowing costs. Even strong earnings and robust demand for AI chips were insufficient to counterbalance the negative impact of inflation, bond yields, and the pressure on debt-heavy companies.
Written by urgent.news from Hindustan Times - World News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
