Nvidia NVDA shares fell more than 2% on Wednesday as hotter-than-expected US inflation data triggered a broader market sell-off, adding to pressure on semiconductor stocks that have struggled throughout the week.
Wednesday’s decline marked the fifth time in six sessions that Nvidia shares traded lower. The stock closed at $228.52 in the previous session and was trading around 8% below its recent all-time high of $243.57.
The weakness extended across Wall Street, with rising Treasury yields weighing on equities as investors reassessed the outlook for interest rates.
Inflation data sends Treasury yields up
Nvidia’s decline followed a broader market retreat after the latest US consumer price index (CPI) report showed persistent inflationary pressures.
Around 11 AM EST, the Dow Jones Industrial Average was down 0.13%, while the S&P 500 declined 0.76%. The Nasdaq Composite led the losses, falling approximately 1%.
Headline CPI rose 0.6% between August and September, in line with economists’ expectations. However, annual inflation accelerated to 3.7%, exceeding forecasts. Core CPI, which excludes food and energy prices, also rose slightly more than anticipated.
The inflation figures pushed Treasury yields higher, with the 10-year yield climbing more than seven basis points. The 30-year Treasury yield also advanced.
Odds of a rate hike at the October 28 meeting of the Fed surged to 43.7%, up from 22.1% yesterday, soon after inflation data was released. Chances of a December rate hike are already high.
Higher yields can put pressure on equities by increasing the returns investors can earn from bonds relative to riskier assets. They can also raise borrowing costs for companies, adding to concerns about valuations, particularly among technology stocks.
With oil prices already elevated, the stronger-than-expected inflation reading also heightened concerns that the Federal Reserve could maintain restrictive monetary policy or consider another rate increase.
Semiconductor stocks extend decline
Nvidia’s losses added to a broader sell-off in semiconductor stocks. The Philadelphia Semiconductor Index, which tracks the sector, fell 2.8% on Wednesday.
Micron Technology shares declined around 1.75%, while AMD lost 4% with Intel and SanDisk each slipping more than 2%.
Investors have been reassessing technology valuations and the financing requirements of companies racing to build AI infrastructure. Questions surrounding the financial positions and potential public listings of OpenAI and Anthropic have added to concerns about the sustainability of debt-funded investment across the industry.
Developments in China have also contributed to uncertainty in the chip market. Reports of progress by Chinese memory maker ChangXin Memory Technologies (CXMT) in a new memory-cell design have raised concerns that the company could eventually narrow the competitive advantage held by established manufacturers.
The company’s efforts to increase storage density have attracted attention as the world’s leading DRAM producers work on similar technology.
Nvidia pledges $250 mn for UK AI safety research
Despite the pressure on AI-related stocks, Nvidia announced a commitment to support artificial intelligence safety research in the United Kingdom.
The company has pledged $250 million worth of computing resources over five years to support research into AI security.
The initiative comes amid growing debate over safeguards for increasingly capable AI systems. Developers at companies including Anthropic and OpenAI have disclosed instances of unwanted or rogue behaviour by AI agents, while some industry figures have warned that advanced AI could pose existential risks to humanity.
These concerns have intensified calls for greater attention to AI safety as the technology becomes more widely deployed.
However, the debate around AI safety has so far coexisted with substantial investment in the sector. Companies continue to spend heavily on chips, data centers and computing capacity as they seek to expand their AI capabilities.
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