AI financing concerns weigh heavily on chip stocks, global tech sector has lost over $1 trillion this week

Expectations of rate hikes, rising AI financing costs, and worsening competitive dynamics—all of these pressures fermented simultaneously this week, pushing global tech stocks into a major sell-off.

The global sell-off in tech stocks continued on Thursday. In U.S. markets, Nvidia closed down 1.84%, AMD lost 1.5%, Intel dropped about 2.8%, and Dell Technologies plunged 6.8%. Losses were even steeper in Asian markets: SK Hynix plummeted more than 10% in one day, Samsung Electronics fell 8.73%, and Japan's SoftBank Group was down 7.9%.

According to CNBC, as of this Thursday, the world's 20 largest AI and semiconductor stocks by market capitalization have collectively lost over $1 trillion. The iShares Semiconductor ETF (SOXX), which tracks the chip sector, posted its eighth consecutive day of losses Thursday, with a cumulative decline of roughly 12.7%. According to Dow Jones Market Data, this is the ETF’s longest losing streak in 11 years.

Nvidia CEO Jensen Huang told Bloomberg at an event in Stockholm that he doesn't believe Nvidia needs to endorse CoreWeave, adding that "their cost of capital is actually coming down." This statement led to a rebound in neo-cloud stocks during trading; CoreWeave closed up 5.94%, and Nebius rose 1.29%.

Multiple Negative Factors Compound, Driving Layered Sell-off Logic

This round of sell-offs was not triggered by a single event but rather the mutual reinforcement of several negative signals within the same time window.

Inflation data was the spark. The U.S. September Consumer Price Index (CPI) released on Wednesday exceeded expectations, prompting the market to increase its bets on further Fed rate hikes. The Nasdaq Composite closed down 1.88% at 26692.87, while the S&P 500 fell 1.11% to 7718.94.

Anthropic data further dampened market sentiment. According to the Financial Times, AI startup Anthropic disclosed at a private investor meeting on Wednesday that its Q3 revenue reached $16.8 billion, a quarter-on-quarter increase of about 50%—but this growth rate was much lower than the roughly 145% jump in Q2. D.A. Davidson analyst Gil Luria wrote in a client note: "The market seems to have interpreted Anthropic’s update as a negative signal. Given how hypersensitive the market is to AI trades, this reaction is understandable."

Luria expressed a more neutral view. He noted that Anthropic achieved positive cash flow in Q3, showing that the company and OpenAI are "not inherently unprofitable business models." He also wrote that more broadly in the AI sector, "Overall AI usage (and AI spend) may not necessarily be slowing down."

Chinese competition is simultaneously brewing. Last weekend, ChangXin Memory announced a breakthrough on a new architecture, enabling more data to be stored in a smaller space. Elon Musk then posted on X that China will produce "a vast amount of memory chips" by 2028.

Meanwhile, the CEOs of Broadcom and Intel both warned on Monday that financing could be a major obstacle to AI expansion, with Broadcom CEO Hock Tan noting that this challenge could outweigh chip or power shortages.

Rising Rates Directly Hit Returns of AI Infrastructure Investment

The impact of high interest rates on AI infrastructure construction is one of the core drivers of this round of sell-offs.

James Vrachas, executive director at investment bank Post Oak Group, told MarketWatch that chip stocks have already "priced in a lot of future growth expectations," and share prices reflect these expectations. In this context, "even a slight change in sentiment or questioning of expenditures can have a significant impact on stock prices." He said, "Believing in AI's long-term potential and believing that every company benefiting from this growth is fairly valued are two different things."

Baird investment strategist Ross Mayfield told MarketWatch that rising Treasury yields pressure chip stocks, especially high-growth companies and those "on the more aggressive end of the AI risk spectrum" that rely more on external financing. He said that CPI data could increase the urgency for the Fed to hike rates, "which puts immense pressure on short-term interest rates and hits borrowers with weaker financial foundations or those holding floating-rate debt tied to short-term rates especially hard."

Mayfield also pointed out that even hyperscalers are not completely immune to rate hikes. "Even the largest, most cash-rich companies have to reassess the return on investment of these projects," he said. "And much of the market’s momentum is built on hyperscalers’ spending on hardware and data center infrastructure, which now casts a shadow over the entire supply chain."

Deeper Losses in Asian and European Markets, with Korea and Japan Hit the Hardest

The U.S. stock market’s panic quickly spread to Asian and European markets, with losses generally steeper than in the U.S.

On Thursday, South Korea's SK Hynix tumbled more than 10% in a single day, Samsung Electronics fell 8.73%, LG Innotek dropped 8.95%, Seoul Semiconductor plunged 9.28%, and Samsung SDI fell 6.26%. The Korea Composite Stock Price Index (KOSPI) approached its lowest close since April.

Japanese markets also crashed hard. SoftBank Group plummeted 7.9%, Advantest—a semiconductor testing equipment provider—plunged nearly 14%, chip equipment supplier Tokyo Electron fell 6.45%, and Renesas Electronics dropped 8%. TSMC was down 1.81%.

In Europe, Dutch semiconductor equipment giant ASML fell slightly, Infineon dropped 5%, and ASM International declined 7%.

Analysts: Demand Signals Are the True Red Flag

Despite negative market sentiment, some analysts believe this wave of selling has not yet reflected a real deterioration in AI demand.

Yorkville Ives technology analyst Dan Ives wrote in a report that this sell-off reflects concerns over financing costs, not demand for AI computing power. "U.S. Treasury yields crossing 5% have indeed pushed up 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 now is a buying opportunity and says the AI infrastructure boom remains in its early stages. He specified the real red flags: "What would truly change our view are demand signals—not interest rate signals"—including hyperscalers cutting capital expenditures, contract cancellations, or GPU rental prices falling.

Gabelli Funds portfolio manager Hendi Susanto told MarketWatch that many chip and semiconductor equipment companies "have strong balance sheets and ample free cash flow." He expects most of these companies "to end the year in a strong position," especially those whose demand still exceeds supply. He also noted that the coming tech earnings season will reveal "how much investors have factored inflation concerns into valuations."