US semiconductor stocks experienced a notable decline on Thursday amid investor concerns over persistent inflation, rising borrowing costs, and debt issues linked to artificial intelligence (AI) infrastructure. Major players like Nvidia and Advanced Micro Devices (AMD) saw their shares fall by 2% and 4%, respectively, contributing to a broader sell-off in the chip sector.
Memory-chip manufacturers also faced losses, with SanDisk shares dropping 6% following a 5% decline in the previous session. Meanwhile, Micron and South Korea’s SK Hynix joined in the downturn, as the industry contends with increasing competition from Chinese chipmakers.
Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chipmaker globally, experienced a 4% drop in its shares despite reporting strong earnings and benefiting from ongoing demand for AI chips. The decline underscores investor apprehension about the overall market outlook, even with sustained interest in semiconductor technology.
The specter of inflation has heightened fears that the US Federal Reserve might maintain elevated interest rates for a longer period, which would increase financing costs for companies heavily investing in AI infrastructure. Higher borrowing costs could strain businesses that rely on debt to expand data centers and computing capacity.
AI infrastructure provider CoreWeave also came under selling pressure, with its shares falling as much as 7% on Thursday, after a more than 16% decline in the previous session. The company’s debt-heavy balance sheet has been a focal point for investors as rising bond yields amplify concerns.
This market downturn reflects growing investor scrutiny of the financial sustainability of AI-related investments. Despite robust demand for advanced chips, the semiconductor industry is grappling with higher financing costs and broader economic uncertainties, impacting technology stocks.