The global sell-off in technology stocks continued on Thursday. In the U.S. markets, NVIDIA closed down 1.84%, AMD fell 1.5%, Intel dropped about 2.8%, and Dell Technologies plunged 6.8%. Asian markets suffered even steeper losses, with SK Hynix plunging over 10% in a single day, Samsung Electronics falling 8.73%, and Japan’s SoftBank Group sliding 7.9%.Article author and source: Wall Street Journal
Expectations of interest rate hikes, rising financing costs for AI, and a deteriorating competitive landscape converged this week, triggering a broad sell-off in global tech stocks.
The global sell-off in technology stocks continued on Thursday. In the U.S. markets, NVIDIA closed down 1.84%, AMD fell 1.5%, Intel dropped about 2.8%, and Dell Technologies plunged 6.8%. Asian markets suffered even steeper losses, with SK Hynix plunging over 10% in a single day, Samsung Electronics falling 8.73%, and Japan’s SoftBank Group sliding 7.9%.
According to CNBC, as of Thursday this week, the combined market value of the world’s top 20 AI and semiconductor stocks has declined by over $1 trillion. The iShares Semiconductor ETF (SOXX), which tracks the chip sector, recorded its eighth consecutive day of declines on Thursday, with a cumulative drop of approximately 12.7% during the period—marking the longest consecutive losing streak in the ETF’s 11-year history, according to Dow Jones Market Data.
NVIDIA CEO Jensen Huang told Bloomberg during an event in Stockholm that he believes NVIDIA does not need to endorse CoreWeave, adding that "their cost of capital is actually declining." This comment spurred a intraday rebound in neocloud stocks, with CoreWeave closing up 5.94% and Nebius rising 1.29%.
Multiple negative factors are overlapping, creating a layered selling logic. This selling pressure is not triggered by a single event, but rather by multiple negative catalysts reinforcing each other within the same time frame.
Inflation data was the trigger. The U.S. September Consumer Price Index (CPI), released on Wednesday, came in higher than expected, prompting the market to increase bets on further Fed rate hikes. The Nasdaq Composite closed down 1.88% at 26,692.87, while the S&P 500 fell 1.11% to 7,718.94.
Anthropic’s data has further weighed on market sentiment. According to the Financial Times, the AI startup Anthropic disclosed at a private investor meeting on Wednesday that its third-quarter revenue reached $16.8 billion, a roughly 50% quarter-over-quarter increase—but this growth rate was far below the approximately 145% quarter-over-quarter increase seen in the second quarter. D.A. Davidson analyst Gil Luria wrote in a client report: "The market appears to have interpreted Anthropic’s update as a negative signal, which is understandable given the market’s heightened sensitivity to AI-related trading."
Luria himself holds a more neutral view on this. He noted that Anthropic generated positive cash flow in the third quarter, indicating that the company and OpenAI "are not inherently unprofitable business models." He also wrote that, from a broader perspective of the AI industry, "overall AI usage (and AI spending) does not necessarily show signs of slowing down."
Competition in China is intensifying. Last weekend, CXMT announced a breakthrough in a new architecture that enables more data to be stored in a smaller space. Elon Musk then posted on X that China will produce "massive amounts of memory chips" by 2028.
Meanwhile, the CEOs of Broadcom and Intel both warned on Monday that financing issues could become a major obstacle to AI expansion, with Broadcom CEO Hock Tan stating that this challenge could even surpass shortages of chips or power.
Rising interest rates directly impact the return on investment for AI infrastructure, and this effect of high interest rates on AI infrastructure development is one of the core rationales behind this sell-off.
James Vrachas, Executive Director at investment bank Post Oak Group, told MarketWatch that chip stocks have "already priced in a large portion of future growth expectations," with their current prices reflecting those forecasts. Under these conditions, "even a slight shift in sentiment or questioning of spending could have a significant impact on stock prices." He added, "Believing in the long-term potential of AI is different from believing that every company benefiting from this growth is fairly valued."
Baird investment strategist Ross Mayfield told MarketWatch that rising Treasury yields are pressuring the chip sector, particularly high-growth stocks and companies on the more aggressive end of the AI risk spectrum that rely heavily on external financing. He noted that CPI data could heighten the urgency for the Fed to raise rates, "creating significant pressure on short-term interest rates and directly impacting borrowers with weaker financial fundamentals or floating-rate debt tied to short-term rates."
Mayfield also noted that even hyperscalers are not entirely immune to interest rate changes. "Even the largest and most cash-rich companies must reassess the return on investment for these projects," he said, "and since much of the market's momentum is built on hyperscalers' spending on hardware and data center infrastructure, this casts a shadow over the entire supply chain."
Markets in Asia and Europe experienced deeper declines, with South Korean and Japanese stocks hit hardest. The selling sentiment from U.S. markets rapidly spread to Asia and Europe, where losses generally exceeded those in the U.S.
On Thursday, South Korea’s SK Hynix plunged over 10% in a single day, Samsung Electronics fell 8.73%, LG Innotek dropped 8.95%, Seoul Semiconductor declined 9.28%, and Samsung SDI slid 6.26%. The Korea Composite Stock Price Index (KOSPI) neared its lowest closing level since April.
The Japanese market also suffered heavy losses. SoftBank Group fell 7.9%, Advantest, a semiconductor test equipment provider, plunged nearly 14%, Tokyo Electron, a chip manufacturing equipment supplier, dropped 6.45%, and Renesas Electronics declined 8%. TSMC fell 1.81%.
In Europe, Dutch semiconductor equipment giant ASML slipped slightly, Infineon fell 5%, and ASM International dropped 7%.
Analyst: Demand signals are the true alarm line; despite weak market sentiment, some analysts believe this selling pressure has not yet reached a material deterioration in AI demand.
Yorkville Ives analyst Dan Ives wrote in a report that this sell-off reflects market concerns over financing costs, not skepticism about demand for AI computing power. "The rise in U.S. Treasury yields above 5% has indeed increased financing costs for these infrastructure projects; it is reasonable for investors to focus on balance sheets and contract structures, but interest rates are a financing issue, not a demand issue."
Ives believes the current moment presents a buying opportunity and states that the AI infrastructure boom is still in its early stages. He clearly identifies the true warning signs to watch for: "What would actually change our assessment are demand signals, not interest rate signals"—including hyperscale cloud providers cutting capital expenditure plans, contract cancellations, or declining GPU rental prices.
Gabelli Funds portfolio manager Hendi Susanto told MarketWatch that many chip and semiconductor equipment companies "have remained financially strong with ample free cash flow," and he expects most of them to "end the year on a strong note," particularly those where demand still outstrips supply. He also noted that the upcoming earnings season for tech companies will reveal "the extent to which investors have priced in inflation concerns."
Risk Disclaimer and Limitation of Liability
The market carries risks; invest with caution. This article does not constitute personal investment advice and has not taken into account individual users’ specific investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions presented herein are suitable for their particular circumstances. Investment decisions based on this content are made at your own risk.