Chip Stocks Slide Again on Hot Inflation and AI-Funding Fears as Wall Street Closes Higher

Chip stocks fell again on Thursday, Oct. 15, as a hotter-than-expected inflation backdrop collided with fresh doubts about how the AI build-out gets financed. NVDA closed down 1.8% at $217.23 and the VanEck Semiconductor ETF (SMH) lost 1.0%, according to SentiSense market data. The damage was worse early in the session: MU fell 4.4% shortly after the open, with INTC down 4.7%, AMD down 4% and Nvidia down 2.6% at that point, MarketWatch reported. Micron recovered to close up 1.9%, which says the selling eased as the day went on.

The pressure started in Asia. Samsung Electronics and SK Hynix each slid more than 6% early in Seoul's session, sending the Kospi down as much as 6.5%, as worries about Federal Reserve rate hikes and AI funding spread from U.S. markets, Bloomberg reported. In the U.S., the trigger was the September producer price index, up 6.3% from a year earlier, on top of a 3.7% consumer-price reading the day before. AI-credit stress added to it: CoreWeave fell 6% before the open after plunging 15.5% on Wednesday, and Oracle had closed nearly 9% lower on Wednesday, CNN reported. "Worries about the AI buildout, bubbly valuations, lower-than-expected earnings growth at leading US frontier labs, Chinese competition, inflation and rates sent investors running for the covers," Saxo strategist Neil Wilson wrote, as quoted by CNN.

Anthropic was part of the story. MarketWatch said a quarterly revenue update the company gave investors added to concerns about the health of the AI ecosystem: the FT reported third-quarter revenue of $16.8 billion with sequential growth of almost 50%, down from almost 145% in the second quarter, and D.A. Davidson's Gil Luria called the update "more mixed". Barron's framed Nvidia's slide around its close ties to CoreWeave, with investors watching whether the chipmaker lends the cloud provider a hand.

The selloff stayed inside the chip group. The S&P 500 rose 0.3% to 7,744.81, ending a three-day drop, the Dow gained 1.1% to 52,177.81 and the Nasdaq Composite edged up 0.1%, according to Investing.com and Bloomberg's market wrap. Treasuries rallied, with the 10-year yield down about 10 basis points to 5.09%. CME FedWatch odds of a quarter-point hike this month rose to nearly 34% from about 29% after the producer-price data, then eased to around 27%, Investing.com reported.

What to watch: whether chip stocks can hold Thursday's afternoon recovery, how the Fed reads a producer-price jump far larger than consumer inflation ahead of its Oct. 28 decision, and whether AI-infrastructure borrowers such as CoreWeave can calm the credit market. A rebound in the broader market while semiconductors lag would suggest investors are rotating out of the AI trade rather than out of stocks.