Nvidia stock sinks as chip sell-off deepens on hot inflation data

The sell-off in chip stocks deepened on Wednesday as a hotter-than-expected inflation read raised worries about more rate hikes by the Federal Reserve and a higher cost of capital, potentially throwing a wrench into the AI trade.

Long-dated bond yields, tied to borrowing costs, rose before trimming gains after September’s inflation data was released.

That put pressure on Tech (XLK) stocks, which were already on jittery ground amid elevated yields, rising debt, possible disruptions to AI buildouts, and overall concerns about a bubble.

Chip giant Nvidia (NVDA) closed the session down more than 3%, leading the sector lower, as seen on Yahoo Finance’s AlphaSpace heatmap below.

The chip selloff started earlier this week, as memory makers Marvell Technology (MRVL) and SK Hynix (SKHY) fell in recent sessions amid worries over Chinese competition.

On Wednesday, worries about borrowing costs also hit the AI trade.

CoreWeave (CRWV) stock fell more than 16% after a chart of the neocloud providers’ bond yields circulated on social media.

The stock’s sharp sell-off highlighted concerns about the company’s debt-heavy balance sheet and whether it can scale fast enough to manage its growing interest expense.

Any slowdown in AI spending could spell trouble for chip makers, which have been the main beneficiaries of infrastructure spending as…