Nvidia, AMD and major semiconductor makers shed billions in value Thursday as investors grew anxious about the rising cost of financing AI infrastructure buildouts.
Nvidia dropped 2% while AMD and Intel each fell 4%. Dell Technologies sank 8%. Twenty of the world's most valuable AI and semiconductor stocks shed more than $1 trillion collectively so far this week.
The rout extended globally. South Korean chip giant SK Hynix plunged more than 10%, while Samsung Electronics fell 8.73%. Japan's SoftBank Group tumbled 7.9% and semiconductor testing equipment maker Advantest plunged almost 14%. Taiwan's TSMC, the world's largest contract chipmaker, fell 1.81%. In Europe, Dutch semiconductor giant ASML dropped 5.2%, Infineon Technologies shed 8.2%, and ASM International fell 8.6%.
The sell-off reflects investor concerns that higher U.S. Treasury yields, now climbing above 5%, will increase borrowing costs for the massive capital spending required to build AI infrastructure. Broadcom CEO Hock Tan warned Monday that financing could become a bigger challenge to AI expansion than chip shortages or electricity constraints.
"Higher yields raise the cost of financing these builds, and investors are right to focus on balance sheets and contract structure, but rates are a financing question, not a demand question," said Dan Ives, tech analyst at Yorkville Ives.
Memory chip oversupply fears also weighed on sentiment. Concerns have emerged that global memory chip oversupply could arrive as early as 2029 as manufacturers ramp production capacity to meet AI demand. China's ChangXin Memory Technologies announced over the weekend that it had achieved a breakthrough on a new architecture to boost memory density, signaling intensifying competition.
Nvidia CEO Jensen Huang attempted to ease nerves about AI infrastructure funding at an event in Stockholm. Huang told Bloomberg he saw no need for Nvidia to backstop neoclould provider CoreWeave and that CoreWeave's "cost of capital is actually decreasing." Neoclouds pared some earlier losses following his remarks. CoreWeave sank 3%, Nebius fell 5% and IREN dropped more than 8%.
Micron recovered to positive territory by noon ET after an earlier 5% decline.
The declines came after the Nasdaq Composite dropped 1.88% Wednesday and the S&P 500 fell 1.11% following hotter-than-expected U.S. inflation data that fueled concerns about further Federal Reserve rate increases.
Ives characterized the pullback as presenting a buying opportunity, noting the AI infrastructure boom remained in early stages. He said demand for AI computing power stayed robust and that actual warning signs would include hyperscaler capital expenditure cuts, canceled contracts, or falling GPU rental prices.