U.S. inflation shock deepens sell-off in Nvidia and other semiconductor stocks

[Financial News] Higher-than-expected inflation data stoked fears of further interest rate hikes by the U.S. central bank, the Federal Reserve (Fed), and drove up funding costs, putting the AI investment boom that had propelled markets on alert. As a result, a sell-off concentrated in semiconductor stocks intensified further on the 14th (local time).
In the wake of the U.S. September Consumer Price Index (CPI) released that day, long-term Treasury yields, which are closely tied to borrowing costs, rose before giving back some of their gains. The inflation report nevertheless put significant pressure on tech stocks, already walking a tightrope amid high interest rates, debt burdens, the risk of disruptions to AI infrastructure construction and bubble concerns. September CPI rose 3.7% year over year, topping the market forecast of 3.6%.
Nvidia, the sector bellwether, plunged more than 3% that day, leading the decline in semiconductor stocks. The slide in chip stocks appears to be deepening further, following weakness earlier in the week among memory chipmakers such as Marvell Technology and SK hynix amid concerns about intensifying competition with China, and as worries over rising funding costs have added to the pressure.
CoreWeave, an AI high-performance computing and neocloud company, plunged at least 16% after a chart of the yields on its bonds circulated on social media. The drop is seen as reflecting deep market concerns about CoreWeave’s heavily debt-based financial structure and whether it can expand its business quickly enough to bear its rapidly rising interest costs.
Yahoo Finance reported in its analysis that, as major data center operators known as “hyperscalers” race to build out capacity, even a slowdown in a single area of AI-related spending would immediately hit semiconductor manufacturers, which have so far been the biggest beneficiaries of infrastructure investment.
Meanwhile, the market’s attention is focused on TSMC, the world’s largest contract chipmaker, which reports earnings on the 15th. Investors expect TSMC’s quarterly net income to rise by about 60% year over year, while also looking to the results as a gauge of the sustainability of the AI infrastructure buildout.
ASML, the monopoly supplier of semiconductor lithography equipment, previously warned that it “may not be able to fully meet the surging demand through 2027 and 2028.” Investors are therefore expected to focus even more closely on TSMC’s production capacity and the state of its supply chain.
[email protected] Yoon Jae-jun Reporter