AI Trade Splits as Inflation Fears Hit High-Flying Tech Names

The AI trade showed cracks in the October 14 session, with some of the stocks that powered 2025's rally coming under pressure as investors weighed whether higher inflation and borrowing costs could slow the pace of AI infrastructure spending. The selling wasn't uniform — it hit the most expensive, most hyped names hardest, while leaving others largely untouched. The divergence matters because it suggests investors are starting to distinguish between AI companies with near-term earnings support and those trading mostly on future promise. TSMC, the Taiwanese chipmaker that manufactures processors for Nvidia and other AI leaders, is expected to report its sixth straight quarter of record profit, underscoring that the underlying demand for AI chips hasn't disappeared even as stock prices wobble. What's unresolved is whether this is a rotation or the start of a broader repricing. Seasonally, Nvidia has risen in 20 of the last 27fourth quarters, but two of the seven down years wiped out more than half the stock's value, a reminder that AI-linked stocks can fall hard when sentiment turns. ASML's latest quarterly results drew comparatively muted concern over operations but sharper scrutiny of its valuation, a pattern that could repeat across the sector if rates keep climbing.