AI Stocks Slide as Inflation Data Revives Rate Hike Fears

Stock futures pointed lower Thursday as worries over massive spending on artificial intelligence collided with fresh signs of rising prices in the United States. The S&P 500 futures slipped 0.2 percent while Nasdaq-100 contracts dropped more than 1 percent in early trading. Dow futures managed a modest gain of about 150 points.

The selloff built on Wednesday's losses when the Nasdaq Composite fell nearly 2 percent. Investors grew uneasy after inflation data showed consumer prices rising 3.7 percent in September, faster than expected. That reading has traders betting the Federal Reserve may need to keep rates higher for longer or even raise them again soon.

Heavy selling hit semiconductor names tied to the AI push. Micron Technology shares dropped 4 percent in premarket action while Advanced Micro Devices fell almost 3 percent. South Korea's Kospi index plunged more than 8 percent overnight, forcing trading halts at times as memory chip makers SK Hynix and Samsung Electronics both lost around 10 percent. Japan's Nikkei 225 index tumbled nearly 5 percent.

CoreWeave shares slid another 5 percent after plunging more than 15 percent the prior session. The cloud computing firm has borrowed heavily to expand its AI infrastructure, and bond yields on its debt have jumped. Reports that Anthropic's revenue reached 16.8 billion dollars in the third quarter did little to calm nerves. Some traders now question whether even fast-growing AI companies can justify the enormous valuations built up in chipmakers and related firms.

Meanwhile Taiwan Semiconductor Manufacturing Company reported record third-quarter profit of 763 billion new Taiwan dollars, beating estimates on strong demand for advanced chips used in AI applications. The company guided for continued growth into the fourth quarter and signaled higher capital spending through 2028. Yet those results only underscored the divide between a few big winners and the broader market's growing skepticism about how long the spending spree can last.

Congress has not passed meaningful rules on artificial intelligence despite repeated warnings about its risks. At the same time disclosures show at least 106 members of Congress or their families hold investments in AI developers, chipmakers, and data center operators worth between 83 million and 325 million dollars. The holdings cluster in a handful of large tech names.

Outside tech, Walmart shares rose 3 percent and Merck gained more than 1 percent as investors rotated into areas less exposed to the AI trade. The pattern suggests markets may be waking up to the possibility that years of hype around artificial intelligence have created concentrated bets that now look vulnerable to shifts in interest rates and economic data.