AI Stocks Slide as Inflation Data Revives Rate Hike Fears

Global markets absorbed another sharp leg lower in technology shares Thursday as investors digested hotter-than-expected U.S. inflation figures and growing doubts about the sustainability of heavy borrowing across the artificial-intelligence supply chain. The Nasdaq Composite had already posted its largest single-day drop since July, and futures pointed to further losses, with contracts tied to the index falling more than 1 percent in early trading. The broader S&P 500 futures slipped 0.2 percent while the Dow Jones Industrial Average futures managed a modest gain.

South Korean chipmakers bore the brunt overnight. The Kospi 200 index plunged more than 8 percent, triggering circuit breakers, as SK Hynix and Samsung Electronics each dropped nearly 10 percent or more. Japan’s Nikkei 225 fell almost 5 percent. On Wall Street, memory-chip stocks such as Micron Technology and Advanced Micro Devices shed 4 percent and nearly 3 percent respectively in premarket action, extending Wednesday’s losses. Shares of CoreWeave, the AI-focused cloud provider, dropped another 5 percent after tumbling more than 15 percent the prior session on concerns it had taken on excessive debt to fund its build-out.

The catalyst for the selling was a September consumer-price index reading that showed inflation rising to 3.7 percent, the fastest pace in several months and above forecasts. Traders immediately adjusted bets on Federal Reserve policy, with some now pricing in the possibility of another rate increase before year-end. Analysts at Deutsche Bank described the combination of the strong inflation print and fresh skepticism toward AI spending as an “incredibly tumultuous 24 hours” for markets.

Even as sentiment soured on many AI-linked names, Taiwan Semiconductor Manufacturing Co. reported record quarterly profit for the sixth consecutive period, powered by demand for advanced chips used in AI systems. The company’s revenue and net income both exceeded expectations, and it raised its full-year outlook. The contrast underscored how gains from the AI trade remain highly concentrated among a handful of suppliers while many speculative bets elsewhere in the sector face sudden scrutiny.

That concentration of upside is visible in Washington as well. An analysis of recent congressional financial disclosures found that at least 106 members of Congress, their spouses or dependent children hold investments in AI developers, chipmakers, cloud providers or data-center companies. The holdings, valued between roughly $83 million and $325 million, are heavily weighted toward a small group of large technology firms. While lawmakers have yet to enact comprehensive rules governing the technology, many continue to benefit directly from its rapid expansion.

The latest market turbulence arrives as households face the prospect of higher borrowing costs if the Fed responds aggressively to persistent inflation. Energy prices contributed to the September CPI increase, but core measures also remained elevated, leaving policymakers with limited room to ease. For investors who piled into AI-related debt and equities at stretched valuations, the combination of policy uncertainty and questions about revenue growth at companies such as Anthropic has produced a rapid repricing.