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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.
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US chip stocks fell on Thursday as concerns over inflation and rising debt costs increased. Investors worried that higher inflation could lead to expensive borrowing, especially for companies spending heavily on artificial intelligence (AI) infrastructure. The concerns deepened the ongoing sell-off in chip stocks.
Nvidia shares fell 2%, while Advanced Micro Devices (AMD) dropped 4%. The decline in both companies extended the wider sell-off in semiconductor stocks across global markets.
Sandisk, Micron and SK Hynix stocks fall
Sandisk shares tumbled 6% on Thursday after falling 5% in the previous session. Sandisk makes flash memory products and has been the S&P 500's top-performing stock in 2026. The latest fall added to its losses from the previous trading session, according to Yahoo Finance.
Micron shares dropped 4%, while South Korean chipmaker SK Hynix also recorded a decline. Both companies faced further pressure following losses in the previous session.Investors were also worried about growing competition from Chinese chipmakers. This added to the fall in memory-chip stocks.
Strong earnings and record profits at Taiwan Semiconductor Manufacturing Company (TSMC) failed to lift investor confidence. TSMC is the world's largest chipmaker that makes chips for other companies. It reported strong results as demand for AI chips remained high. However, its shares still fell 4% on Thursday as chip stocks continued to fall.
Also read: CoreWeave stock crashes 15%, falls further as AI slowdown fears and debt woes hit
AI debt worries weigh on chip stocks
One reason for the fall was concern about the high cost of borrowing money for companies with large debts. Many companies are spending huge amounts of money to build the technology and computing systems needed for AI. Investors are increasingly concerned about how these companies will manage their debt if borrowing costs remain high, according to Yahoo Finance.
US inflation raises Fed rate concerns
Higher-than-expected inflation added to these concerns and raised questions about the Federal Reserve's next decision. Investors were worried that rising prices could make it harder for the US central bank to ease monetary policy, potentially keeping borrowing costs higher for longer.
US wholesale inflation in September rose at its fastest pace since 2022. The increase added to fears that businesses could face higher lending costs ahead. Wholesale inflation measures changes in prices received by producers and can provide an indication of price pressures in the economy.
CoreWeave shares extend losses amid rising debt costs
Concerns about AI infrastructure spending also put Nvidia-backed CoreWeave under pressure. CoreWeave is a neocloud company that provides computing infrastructure for AI-related workloads. A spike in the yields on its bonds raised concerns about its debt-heavy balance sheet and the impact of rising interest rates.
CoreWeave shares fell as much as 7% on Thursday, extending a sharp decline from the previous session. The stock had already lost more than 16% on Wednesday. The latest fall reflected continued investor concerns about the company's debt, higher bond yields and persistent inflation, according to Yahoo Finance.
The broader concern for chip companies is whether heavy investment in AI infrastructure can remain financially sustainable if borrowing becomes more expensive. With inflation rising and bond yields putting pressure on debt-heavy companies, even strong earnings and demand for AI chips were not enough to lift several major semiconductor stocks on Thursday.
