Nvidia Stock Falls Again as AI Chip Sell-Off Deepens Despite TSMC's Record Profit and Robust Demand Outlook

NEW YORK — Nvidia shares fell for a second straight day Thursday as a global sell-off in artificial intelligence and semiconductor stocks deepened, overshadowing record results from Taiwan Semiconductor Manufacturing Co., the contract manufacturer that makes Nvidia's chips.

Nvidia shares were down $5.15, or 2.3%, at $216.16 as of 10:23 a.m. Eastern time. The stock had fallen 3.16% on Wednesday to close at $221.30, as the Nasdaq composite dropped 1.88%.

The world's most valuable company now trades about 11% below its 52-week high of $243.37. Its market value stands at about $5.2 trillion.

$1 trillion wiped out

The decline is part of a broad rout in AI-linked stocks. Collectively, 20 of the world's most valuable AI and semiconductor companies have lost more than $1 trillion in market value so far this week, according to CNBC.

Advanced Micro Devices fell about 6% on Thursday, while memory chipmaker Micron dropped about 5%. Sandisk, the S&P 500's top performer this year, tumbled about 6% after a 5% loss the previous day.

The sell-off has spread worldwide. South Korea's Kospi plunged more than 7% on Thursday and triggered a circuit breaker as Samsung Electronics and SK Hynix fell sharply.

TSMC results fail to help

The losses came despite strong results from TSMC, often viewed as an early indicator of demand for Nvidia's chips.

TSMC reported a sixth straight quarter of record profit, with net income jumping nearly 69% and revenue surging 51% from a year earlier. The company forecast fourth-quarter sales of as much as $54.3 billion, above analyst estimates.

"Demand for our leading-edge technologies continue to be extremely robust," TSMC CEO C.C. Wei said on the company's earnings call, pointing to rising AI demand driven by the adoption of agentic AI.

But the company's gross margin slipped to 66.4% in the third quarter from 67.7% in the second quarter, as it ramped up production of its new 2-nanometer process. TSMC expects fourth-quarter gross margin of 65% to 67%.

TSMC shares fell about 4% in U.S. trading, as the results did little to lift sentiment around the AI trade.

Why chip stocks are falling

Several factors have converged to drive the sell-off.

The first is rising interest rate expectations. A report Wednesday showed U.S. consumer prices rose 3.7% in September from a year earlier, more than expected, raising the possibility that the Federal Reserve could raise rates again. Higher rates tend to weigh on technology stocks, whose valuations depend heavily on future profits.

The second is growing concern about how the AI infrastructure boom is being financed. Shares of AI cloud provider CoreWeave fell about 15% on Wednesday as yields on its bonds spiked toward 15%, signaling stress in credit markets for companies borrowing heavily to build data centers. Many of those companies are major buyers of Nvidia's chips.

Research firm Gartner said in a report Wednesday that more than 80% of so-called neocloud providers could cease independent operations by 2030.

The third factor is competition in memory chips. Chinese chipmaker ChangXin Memory Technologies said this week it had made progress on a denser memory design, raising concerns about future oversupply and pricing pressure for memory makers. Worries about a potential global memory oversupply as early as 2029 have also weighed on sentiment.

Huang comments on AI safety

In separate news, Nvidia CEO Jensen Huang said in a Bloomberg interview published Wednesday that Nvidia would consider halting chip supplies to customers developing unsafe AI, after first raising concerns with them, according to MT Newswires.

The comments were not cited as a cause of the stock's decline, which analysts attributed largely to broad sector selling.

Strong fundamentals

The sell-off contrasts with Nvidia's powerful financial performance. In its fiscal year 2026, the company's revenue rose 65% to $215.9 billion, and earnings climbed to about $120 billion. Over the past 12 months, Nvidia's revenue has topped $300 billion.

The company's most recent quarterly gross margin was about 75%, reflecting strong pricing power for its AI processors.

Some analysts argue the stock is reasonably valued relative to its growth prospects, trading at about 18 times forward earnings. Others warn that the AI trade has become crowded and vulnerable to shifts in sentiment, particularly if spending by major technology companies slows.

Nvidia is scheduled to report its third-quarter fiscal 2027 results in November, which will offer a direct read on demand for its chips.

In the near term, investors will be watching the Federal Reserve's interest rate decision next week, further inflation data and developments in credit markets for AI infrastructure companies.

The direction of chip stocks is also likely to depend on earnings reports later this month from major technology companies such as Microsoft, Alphabet, Amazon and Meta, which are among Nvidia's largest customers and whose capital spending plans will be closely scrutinized.