US STOCKS-Nasdaq futures dive 1% as AI rout deepens on debt concerns

Nasdaq futures fell more than 1% on Thursday as a selloff in AI-related stocks deepened on fears that higher interest rates will make it harder for companies ‌to fund AI investments.

The Nasdaq and the S&P 500 marked their biggest one-day drop since July on Wednesday after hotter-than-expected inflation data fueled expectations of more interest rate hikes from the Federal Reserve and sent some high-flying tech stocks tumbling. Further denting sentiment, TSMC, the world's largest ‌manufacturer of advanced chips, struck a cautious note for 2027 on Thursday due to macroeconomic uncertainties after reporting its sixth ‌consecutive record quarterly profit.

CoreWeave, a heavily indebted data center operator, has been at the eye of the recent tech storm and fell 4.5% in premarket trading after a 15% drop on Wednesday. Cloud computing giant Oracle fell 2% after a nearly 9% drop in the previous session. The two companies' bonds ⁠also came ​under pressure, pushing their yields ⁠to record highs on Wednesday.

CoreWeave and Oracle, along with other chipmakers, hyperscalers and cloud companies, triggered a selloff on Wednesday that wiped out $80 billion of market value. Chipmakers ⁠extended losses too. Nvidia fell 1.3%, while Micron Technology and Advanced Micro Devices dropped 4% and 1.9%, respectively.

"A slowdown in the AI infrastructure ​build-out would imply a sharp slowdown in US growth expectations," said Mohit Kumar, economist at Jefferies. "We expect the earnings season ⁠to justify that earnings and demand remain robust," he said, however noting that Jefferies would look to take some chips off the table ahead of ⁠the ​midterm election.

At 4:04 a.m. ET, S&P 500 E-minis were down 27.5 points, or 0.35%. Nasdaq 100 E-minis were down 380.25 points, or 1.26% and Dow E-minis were up 202 points, or 0.39%. Investors will keep a close eye on producer prices data ⁠at 8:30 a.m. ET for clues on factory inflation. September retail sales, initial jobless claims data and several business surveys will also be ⁠released later in the ⁠day.

Traders are pricing in a 27% chance of a Federal Reserve rate hike later this month, according to CME Group's Fedwatch tool, up from 20% a week ago. Meanwhile, the odds ‌of a 25 ‌basis point hike in December stood at 67%.