Inflation, Debt, China: Why AI Stocks Are Taking Such a Beating
Trending Topics Jakob Steinschaden ● Covered by 7 sources
AI stocks just got hit hard as inflation fears and debt worries rip through markets. Chipmakers and AI names are losing huge chunks of value, even with some strong earnings underneath.
Based on reporting by Trending Topics, Jakob Steinschaden — read the original for the full story.
Summary, retelling and take written by AI under human oversight; images are AI-generated illustrations. How we work · Report an error
The AI stock trade is having a very ugly week. What started with a slide on Wall Street on Wednesday turned into a broader rout on Thursday, spreading across Asia and Europe. Nasdaq 100 futures were down 1.3 percent before the U.S. open, after the index had already fallen about 2 percent the day before. CNBC says the 20 most valuable AI and semiconductor stocks have wiped out more than $1 trillion in market value this week alone.
The damage has been heaviest where the rally had gone furthest. Micron, Western Digital, Sandisk and Seagate all fell more than 4 percent in premarket trading. In South Korea, SK Hynix dropped 11.1 percent and Samsung Electronics lost 9.5 percent. The Kospi at one point fell almost 9 percent and triggered its tenth circuit breaker this year. Japan was weak too: Topix slipped 2.4 percent, SoftBank fell 9.3 percent and Kioxia dropped 12.3 percent. In Europe, ASML lost 5 percent in the morning, while ASM International and Infineon each gave up about 8 percent.
The sell-off looks even harsher on the week. SK Hynix is down 23.1 percent since Monday, Samsung 17.3 percent, CoreWeave 17.1 percent, Z.ai 20.0 percent and MiniMax 17.5 percent. Cerebras is down 9.6 percent. Nvidia and AMD are also lower, but by a smaller amount: 2.9 percent and 3.8 percent.
The trigger was inflation. U.S. inflation rose to 3.7 percent in September, and investors quickly pushed up the odds of another Federal Reserve rate hike at the end of the month to almost 32 percent from a little over 22 percent. That is a nasty setup for expensive growth stocks. At the same time, money moved into government bonds, pulling the yield on 10-year U.S. Treasuries down to 5.08 percent, the lowest in three weeks.
What makes the mood worse is the debt behind the AI buildout. Barclays strategist Emmanuel Makonga says the market is starting to think about when the investment cycle peaks. Broadcom CEO Hock Tan has also warned that some AI investors are practically gambling. CoreWeave has become the warning sign: credit default swaps on its five-year bonds jumped above 11 percentage points, and its 2032 bonds traded below 78 cents on the dollar even though they were issued at face value four months ago.
There are still signs the AI boom is not just smoke. TSMC reported its sixth record quarter in a row, with third-quarter net profit up 68.7 percent, and Anthropic says it has reached adjusted profitability. But even that is not calming the market. When a sector gets priced for endless growth, a few rate fears, debt worries and a sharper China story are enough to turn celebration into a stampede.
My take — AI-written commentary, not fact-checked reporting
This is what happens when a market decides chips are a religion and debt is a footnote. The problem isn’t AI itself; it’s the fantasy that every company in the supply chain deserves a growth-stock halo forever. Markets are finally remembering that power bills, borrowing costs and Chinese competition have a vote too.
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