Nvidia (NASDAQ: NVDA) shares fell more than 2% on Wednesday, marking the fifth decline in six sessions, as a hotter-than-expected US inflation report triggered a broad market sell-off and pressured semiconductor stocks. The stock closed at $228.52 in the prior session and traded roughly 8% below its recent all-time high of $243.57.
The decline came after the latest consumer price index (CPI) showed annual inflation accelerated to 3.7%, exceeding forecasts, while core CPI also rose slightly more than anticipated. Headline CPI increased 0.6% month-over-month, in line with expectations. The data pushed Treasury yields higher, with the 10-year yield climbing more than seven basis points and the 30-year yield also advancing.
Following the release, market-implied odds of a rate hike at the Federal Reserve's October 28 meeting surged to 43.7%, up from 22.1% a day earlier. Chances of a December hike remained elevated. Higher yields can pressure equities by increasing the relative appeal of bonds and raising borrowing costs, particularly for technology companies with high valuations.
The broader market reflected the strain: around 11 AM EST, the Dow Jones Industrial Average was down 0.13%, the S&P 500 fell 0.76%, and the Nasdaq Composite led losses with a decline of approximately 1%. With oil prices already elevated, the stronger inflation reading heightened concerns that the Fed could maintain restrictive policy or consider another increase.
Nvidia's losses added to a broader sell-off in chip stocks. The Philadelphia Semiconductor Index dropped 2.8% on Wednesday. Micron Technology fell about 1.75%, AMD lost 4%, and Intel and SanDisk each slipped more than 2%. Investors have been reassessing technology valuations and the financing needs of companies racing to build AI infrastructure. Questions about the financial positions and potential public listings of OpenAI and Anthropic have added to concerns about debt-funded investment across the industry.
Developments in China 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 raised concerns that the company could eventually narrow the competitive advantage held by established manufacturers. CXMT's efforts to increase storage density have drawn attention as leading DRAM producers work on similar technology.
Despite the pressure on AI-related stocks, Nvidia announced a commitment to support artificial intelligence safety research in the United Kingdom. The company 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 behavior 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 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.
This article is for informational purposes only and does not constitute financial advice.
