U.S. semiconductor stocks experienced a downturn on Thursday, driven by concerns over persistent inflation and rising borrowing costs impacting AI infrastructure investments. Notable declines included Nvidia shares, which fell by 2%, and Advanced Micro Devices (AMD), which saw a 4% drop, contributing to a broader sell-off across the chip sector.
The market’s unease was further reflected in memory-chip makers, with SanDisk shares tumbling 6% following a 5% drop in the previous session. Other companies like Micron and South Korea’s SK Hynix also faced losses, compounded by increasing competition from Chinese chipmakers.
Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chipmaker globally, experienced a 4% share decline despite reporting robust earnings and strong AI chip demand. This suggests that investor concerns about the semiconductor market’s future overshadowed positive performance indicators.
Investors are particularly wary that inflation fears might prompt the U.S. Federal Reserve to maintain elevated interest rates longer, potentially increasing financing costs for companies heavily investing in AI infrastructure. Higher borrowing costs pose significant challenges for businesses dependent on debt to expand their data centers and computing capacities.
CoreWeave, an AI infrastructure provider, also saw its shares plummet by as much as 7% on Thursday, following a more than 16% decline in the previous session. The rising bond yields have intensified concerns about the company’s debt-laden balance sheet, reflecting broader market apprehension.
The ongoing downturn signals heightened investor scrutiny regarding the financial viability of AI-related investments amid economic uncertainty and higher financing costs. This cautious approach persists despite the sustained demand for advanced semiconductor technology.