Advanced Micro Devices (AMD) shares fell 5.7% on Wednesday, October 14, closing at $570.82. It was the stock’s sharpest daily percentage decline since August 5, as investors questioned the cost of expanding artificial intelligence infrastructure and the financial sustainability of AI-related investment.

The selling followed U.S. inflation data that raised concerns about borrowing costs. Data center operators require substantial capital to purchase chips, secure power and expand computing capacity, making financing conditions an important factor in future infrastructure spending and chip demand.

AMD Declines Alongside Other Chipmakers

AMD’s decline formed part of a broader selloff across semiconductor companies. Nvidia fell 3.2%, Broadcom lost 3.1% and Taiwan Semiconductor Manufacturing declined 3.4%. Marvell Technology dropped 8.7% as selling spread among major suppliers of processors used in AI systems.

September U.S. inflation reached 3.7%, above market forecasts. The Nasdaq Composite fell 1.9%, while the S&P 500 declined 1.1% as investors assessed the possibility of higher interest rates. Data center operators and server manufacturers also came under pressure: Oracle lost about 9%, and Dell Technologies fell roughly 11% during Wednesday’s session. The declines touched each layer of the AI supply chain, from chip designers to server manufacturers and data center operators.

CoreWeave Debt Raises Questions About AI Spending

CoreWeave shares dropped about 16% as yields on the company’s corporate bonds approached 15%. Higher yields correspond to lower bond prices and reflect growing concern about CoreWeave’s ability to finance additional expansion.

Investor Chamath Palihapitiya shared a chart on X showing that the yield on CoreWeave’s 2032 bond had reached 15%. Elon Musk replied, “Yikes,” drawing further attention to the company’s financing risks. The post is available at https://x.com/chamath/status/2110128893680378299?s=20.

Reports on CoreWeave’s bond selloff also said that quarterly net interest costs had reached $640 million. Chief Executive Mike Intrator defended the company’s business model despite the market decline.

The debt concerns are relevant to AMD because some customers finance chip purchases through borrowing. Higher financing costs could prompt those companies to review new orders, although no company has confirmed spending cuts.

AMD Faces Nvidia Competition Ahead of Earnings

AMD reported $6.7 billion in second-quarter data center revenue, more than double the year-earlier figure. Nvidia reported $89 billion in data center revenue in its latest quarter — more than 13 times the AMD figure — underscoring the scale of its lead in AI accelerators as AMD seeks a larger share of data center spending.

AMD introduced its Helion AI rack design on October 12, with partner systems planned for November. The company is scheduled to report third-quarter earnings on November 3, an update that could provide additional information about data center growth and future AI chip orders.

On Thursday, TSMC reported a 69% increase in quarterly profit, citing AI demand. Planned updates on cloud spending may provide further information about future demand for chips.

Source: https://coincentral.com/amd-stock-drops-5-7-as-ai-debt-fears-rattle-chipmakers/