AI Stocks Slide as Inflation Data Revives Rate Hike Fears

Stock futures pointed lower Thursday as investors digested hotter-than-expected inflation figures and questioned whether heavy borrowing for artificial intelligence projects could outrun returns. S&P 500 futures slipped 0.2 percent while Nasdaq-100 contracts fell more than 1 percent in early trading. The moves followed a sharp session Wednesday in which the Nasdaq Composite dropped 1.9 percent, its largest decline since July.

Overnight action in Asia underscored the breadth of the pullback. South Korea’s Kospi index fell more than 8 percent, triggering circuit breakers as memory-chip makers SK Hynix and Samsung Electronics dropped nearly 11 percent and 9.5 percent. Japan’s Nikkei 225 declined 4.9 percent amid losses at SoftBank and memory producer Kioxia. U.S.-listed shares of Micron Technology and Advanced Micro Devices each fell more than 3 percent in premarket trading, while CoreWeave shares dropped another 5 percent after an earlier 15 percent slide tied to concerns over the company’s debt load for AI infrastructure.

The immediate catalyst was September consumer-price data showing a 3.7 percent annual increase, above forecasts and the fastest pace since May. Traders quickly adjusted odds of additional Federal Reserve rate hikes, with some now pricing in a possible move before year-end. Higher borrowing costs would raise the hurdle rate for the multi-year capital spending plans many chip and data-center firms have announced.

Yet evidence of genuine demand for advanced semiconductors remains visible in corporate results. Taiwan Semiconductor Manufacturing reported record third-quarter net income of NT$763.1 billion, up 68.7 percent from a year earlier and well above estimates. Revenue reached NT$1.49 trillion. The company raised its full-year outlook and projected continued sequential growth in the fourth quarter, citing sustained orders for AI-related chips. Operating margins came in at 58.7 percent, reflecting pricing power rather than speculative enthusiasm.

The contrast between strong end-market demand and skittishness over valuation and leverage is typical of market adjustments. Past episodes of rapid technological adoption have produced similar sequences: early capacity buildouts followed by periods in which investors reassess payback periods and financing structures. Debt levels at some AI infrastructure firms have drawn scrutiny precisely because returns depend on sustained high utilization rates that have yet to be proven across the full cycle.

Separately, disclosures show that roughly one-fifth of Congress members or their immediate families hold investments in AI developers, chipmakers, or related infrastructure companies. Aggregate holdings range between $82.8 million and $325 million, concentrated in a handful of large technology names. These positions exist alongside repeated statements from lawmakers that additional regulation of the sector is required. Historical patterns suggest that when public officials maintain direct financial stakes in industries they oversee, incentives can tilt toward preserving upside rather than imposing constraints that might reduce it.

Markets are pricing both the near-term inflation signal and longer-term questions about capital allocation. The underlying driver of semiconductor demand continues to register in earnings, while price discovery in equities and credit markets works to separate projects likely to deliver returns from those built on thinner assumptions.