US chip and AI-infrastructure stocks slide after inflation report

U.S. chipmakers and AI-infrastructure companies sold off Wednesday after a sharp inflation reading pushed Treasury yields higher, adding to investor concern about the cost of financing the AI build-out.

The Nasdaq Composite fell 1.9% to 26,692.87 at the October 14 close, while the S&P 500 lost 1.1% to 7,718.94 and the Dow Jones Industrial Average slipped 0.1% to 51,621.48. Nvidia dropped 3.2%, Broadcom 3.1% and AMD 5.7%. Losses were steeper for several companies tied to data-center construction: CoreWeave fell 15.5%, Oracle 8.8% and GE Vernova 6.2%.

The sell-off followed new inflation data from the U.S. Bureau of Labor Statistics. The consumer price index rose 0.6% in September on a seasonally adjusted basis and 3.7% from a year earlier. Annual inflation had been 3.4% in August.

The 10-year Treasury yield briefly moved above 5.32%, after trading below 5.17% before the CPI release. Market pricing put the probability of a Federal Reserve rate increase at its next meeting at nearly 35%, up from 22% a day earlier.

Higher bond yields raise borrowing costs for companies financing the AI build-out, including spending on data centers, chips and power equipment. That relationship does not establish a single cause for every stock move.