AI and Tech Stocks Sell Off on Rate Fears and Inflation Data as Nvidia Drops 2%

A broad selloff in artificial intelligence and technology stocks swept through markets on Thursday, driven by investor concern that rising interest rates could constrain AI spending and by fresh data pointing to mounting US inflationary pressures. Nvidia fell roughly 2% as the AI trade reversed, with updates from Taiwan Semiconductor Manufacturing Company and AI startup Anthropic adding to doubts about whether the sector's massive infrastructure investments can generate adequate returns.

The damage spread across the AI supply chain. Super Micro Computer, Bloom Energy, Lumentum, SK Hynix ADR, Applied Digital, Vertiv, Intel, Dell Technologies, and Nebius Group all declined, while SpaceX shares also dropped. The Direxion Daily Semiconductor Bull 3X ETF crashed, with Micron its largest holding. Caterpillar, once a top Dow performer, slid to ninth place in the Dow Jones Industrial Average year-to-date rankings, while Goldman Sachs sat near the bottom of the 30-stock index. Tesla and Charles Schwab also fell.

Not every name moved lower. Nike led the Dow on the day, and Take-Two Interactive surged roughly 4%. Ericsson, Kimberly-Clark, Sirius XM, Equinox Gold, Telus, and SoFi all gained. Chevron and Cisco held the top two spots in the DJIA year-to-date rankings.

ETF flows reflected a rotation away from domestic risk assets. The iShares US Consumer Staples ETF saw about $109.9 million in outflows, the iShares MSCI USA Min Vol Factor ETF shed roughly $100.6 million, and the SPDR S&P Bank ETF lost approximately $84.4 million. International equity funds captured much of the displaced capital, with the JPMorgan Active Value ETF drawing about $340 million in new money, the SPDR Portfolio Developed World ex-US ETF taking in roughly $290.5 million, and the iShares International Country Rotation Active ETF adding approximately $281.9 million.