Chip Stocks Slump as U.S. Treasury Yields Surge Past 5.3%! The AI Tech Stocks You Own Are Having Their Capital Drained by Corporate Debt

On the 18th, U.S. equities faced pressure from Treasury sell-offs, with all three major indices declining. The Philadelphia Semiconductor Index plunged 4.98%.

The AI industry's massive capital demands have led to a surge in corporate bond issuance, crowding out traditional government debt markets. As a result, corporate financing costs have risen across the board, threatening long-term business operations and economic prospects amid ongoing Middle East uncertainty.

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite fell 0.22%, 0.69%, and 1.33% respectively on the 18th. The Philadelphia Semiconductor Index dropped sharply by 4.98%.

● Hidden Costs Weighing on Tech Stocks

AI chip stocks broadly declined. Memory giants SanDisk, Micron, and SK Hynix ADRs tumbled 9.01%, 7.02%, and 9.20% respectively.

Advanced chipmakers' share prices fell due to rising corporate financing costs and unexpectedly high hidden expenses among AI companies.

Intel dropped 6.58%, TSMC ADR fell 4.07%, NVIDIA declined 2.34%, and AMD lost 4.27%.

The Wall Street Journal reported on the 16th that nine tech firms—including Alphabet (Google’s parent), Meta (Facebook’s parent), Amazon, and Microsoft—face $3 trillion in future spending on data centers not reflected on their balance sheets. This potential liability could become a heavy burden for both companies and investors.

Meta’s stock remained under pressure, falling 4.42% on the 18th, while Amazon and Alphabet dropped 0.71% and 0.05% respectively. Microsoft edged up slightly by 0.27%.

● Corporate Bonds Squeeze Treasury Market, Yields Remain Elevated

On the 17th, 30-year, 20-year, and 10-year U.S. Treasury yields spiked near historical highs. Investors resumed selling Treasuries amid ongoing U.S.-Iran tensions, persistent inflation, and rising government deficits.

Higher government bond yields increase borrowing costs for businesses and consumers, dampening investment and consumption sentiment, thereby impacting long-term economic outlooks.

On the morning of the 18th, the yield on U.S. 30-year bonds briefly reached 5.337%, before easing slightly in the afternoon. Long-term yields generally remained around 5.3%.

Treasury price declines also stem from market dynamics. AI hardware and software firms such as Alphabet, Meta, SpaceX, AMD, and NVIDIA have recently issued large-scale corporate bonds to fund expansion, crowding out government debt in the market.

Short-selling of government bonds has increased in the U.S., Japan, and Germany, contributing to upward pressure on yields.

For example, recent yields on corporate bonds from Alphabet, Meta, and NVIDIA rose to approximately 6.4%, 7.5%, and 5.6% respectively—offering higher returns than government bonds. With strong revenue outlooks, investors are shifting toward riskier corporate debt.