Nvidia shares fall again as AI debt fears, inflation bite

Nvidia ↘ 1.43% shares fell again Thursday, Oct. 15, as the chipmaker was pulled into a widening selloff in AI-linked stocks driven by debt worries and hotter-than-expected U.S. inflation. The stock lost about 3% in Thursday trading, AFP reported, after dropping more than 3% on Wednesday, Oct. 14, according to Investopedia via Yahoo Finance.barrons.com+1

Nvidia would rather investors focus on its European tour, but it has been caught up in the "artificial-intelligence debt fright," and attention has turned to whether it will step in to help partner CoreWeave ↘ 11.91%, Barron's News Corp ↘ 0.54% reported.finance.yahoo.com

CoreWeave strain spreads

CoreWeave's shares and bonds slid further Thursday even though its CEO said its deal backlog was strong. The yield on its bonds due 2031 rose above 16%, and the cost of insuring its debt climbed to about 1,000 basis points, Reuters reported. Pressure also came from a Gartner ↘ 0.95% forecast that more than 80% of neocloud providers will "cease independent operations" by 2030, Yahoo Finance noted.reuters.com+1

The two companies are closely tied. Nvidia invested $2 billion in CoreWeave in January and owns about 10% of it, and CoreWeave is a large buyer of Nvidia GPUs, Yahoo Finance reported. Analyst Tal Liani said Nvidia is "basically financing all these deals" to keep rivals' chips out, and expects CEO Jensen Huang to comment on demand: "It's just a question of time."finance.yahoo.com

Baird strategist Ted Mortonson told Yahoo Finance that "the street is tiring of the Bank of Nvidia, the Bank of AMD and the Bank of Broadcom." He pointed to a higher cost of capital and closer scrutiny of circular financing.au.finance.yahoo.com

Inflation adds rate pressure

The September Consumer Price Index rose 3.7% from a year earlier, above the 3.6% economists expected, Yahoo Finance reported. On Thursday, data showed wholesale prices rose 6.3% year over year, the biggest jump since 2022. That raised expectations that the Federal Reserve will hike rates again after September's increase, AFP reported.finance.yahoo.com+1

Chip sector slump deepens

Selling spread across semiconductors. Micron ↘ 5.63%, Intel ↘ 5.79% and AMD Advanced Micro Devices, Inc. ↘ 5.95% all fell in early trading, and the iShares Semiconductor ETF ↘ 4.14% was on track for an eighth straight decline, MarketWatch reported. According to the outlet, a reported slowdown in Anthropic's revenue growth added to concerns. The Financial Times reported that Anthropic's third-quarter revenue reached $16.8 billion, up almost 50% from the prior quarter, compared with roughly 145% growth in the second quarter.morningstar.com

"There's a difference between believing in the long-term potential of AI and believing every company exposed to that growth is appropriately valued," James Vrachas of Post Oak Group told MarketWatch.morningstar.com