Intel INTC and Advanced Micro Devices shares extended their losses on Thursday as the semiconductor sell-off continued across the sector, with even Taiwan Semiconductor Manufacturing Co.’s record quarterly results failing to lift investor sentiment.
At the time of writing, Intel shares fell 3.84%, while AMD declined around 3.77%, extending a difficult stretch for both chipmakers. AMD has finished higher in only one of the past seven sessions, while Intel has lost close to 20% in October.
The weakness comes as investors reassess the outlook for the artificial intelligence industry, with rising financing costs, concerns about returns on AI investments and fresh questions about competition adding to pressure on chip stocks.
Chip stocks remain under pressure
The Philadelphia Semiconductor Index declined for a seventh consecutive session on Thursday, highlighting the breadth of the sell-off.
Other major chipmakers, including Nvidia, also traded lower. TSMC was unable to escape the downturn despite reporting record quarterly results, suggesting that strong company earnings have done little to ease broader concerns across the sector.
One source of investor anxiety is the amount of capital required to sustain the AI boom. Technology companies have committed substantial sums to data centers, advanced processors and computing infrastructure, but questions remain about whether the expected returns will justify the spending.
Intel’s CEO recently identified access to capital and the cost of financing as major constraints on the industry’s expansion. He also emphasized that companies would eventually need to demonstrate meaningful returns to investors.
The concerns have intensified following a sharp decline in CoreWeave’s corporate bond prices, adding to unease about the financial risks associated with AI infrastructure investment.
The rout in the chip-heavy Korean stock market also added to the worries.
Inflation adds to market pressure
The pressure on semiconductor shares also comes amid a challenging macroeconomic backdrop.
US wholesale inflation in September rose to its highest levels since 2022, adding to concerns that price pressures could keep interest rates elevated. The broader stock market delivered a mixed performance on Thursday, with the Dow Jones Industrial Average gaining more than 1% and the S&P 500 rising 0.12%, while the Nasdaq Composite declined 0.3% at the time of writing.
Treasury yields remained relatively calm despite the inflation concerns, but investors continued to assess the possibility of further Federal Reserve tightening.
Earlier in the day, UBS projected a third rate increase in March 2027, extending its forecast for the Fed’s tightening cycle.
Higher interest rates can weigh on equity valuations by increasing borrowing costs and making bonds more attractive relative to stocks.
TSMC comments reopen questions for Intel
Intel also faces uncertainty surrounding Elon Musk’s Terafab initiative, a planned semiconductor manufacturing project intended to supply chips for Musk’s businesses and their AI ambitions.
TSMC CEO CC Wei said the company remained in discussions about the project, raising fresh questions about whether the Taiwanese chipmaker could have an operational role in the proposed facility.
“We are still in discussion, let me say that,” Wei told analysts on TSMC’s earnings call, according to Bloomberg. “But the fab has got to be run by TSMC,” he added.
The comments contrast with Musk’s remarks a week earlier, when he indicated that TSMC was not being considered for an operational role in Terafab.
Intel has been associated with the project, making the possibility of TSMC’s involvement particularly relevant for investors assessing Intel’s potential role in the venture.
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