US semiconductor stocks extended their losses on Thursday as rising inflation concerns, higher borrowing costs and growing worries over debt-fuelled artificial intelligence (AI) investments weighed on investor sentiment.
Nvidia shares fell around 2 per cent, while Advanced Micro Devices (AMD) declined 4 per cent. Memory chipmaker SanDisk dropped 6 per cent, Micron Technology lost 4 per cent, and shares of Taiwan Semiconductor Manufacturing Company (TSMC) slipped 4 per cent despite the company reporting record quarterly profits.
The sell-off came as hotter-than-expected US inflation data fuelled expectations that the Federal Reserve could maintain higher interest rates or consider further tightening of monetary policy. Wholesale inflation in September rose at its fastest pace since 2022, increasing concerns that borrowing costs could remain elevated.
Investors are also reassessing the financial sustainability of the massive investments being made in AI infrastructure, including data centres, computing systems and advanced chips. Companies relying heavily on debt to fund these projects could face mounting financial pressure if interest rates remain high.
Concerns intensified following a sharp decline in the shares and bonds of CoreWeave, an AI computing infrastructure provider backed by Nvidia. The company’s stock fell further on Thursday after losing more than 16 per cent in the previous session, amid worries about its debt burden and financing costs.
The weakness extended beyond the US, with semiconductor shares in Asia and Europe also facing selling pressure. Growing competition from Chinese chipmakers added to concerns, particularly in the memory-chip segment.
The downturn has raised questions about whether the returns from AI-related investments will justify the substantial capital being committed to the sector. Despite strong earnings and sustained demand for AI chips, investors have become increasingly cautious about valuations, financing risks and the pace of future spending.
