Global chip stocks wipe out $420 billion after ASML sales warning

(Bloomberg) — Investors in chip stocks face new scrutiny after tepid forecasts from major equipment supplier ASML Holding NV sparked global turmoil in the sector.

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The combined market capitalization losses of the US chipmakers index and the largest Asian stocks amounted to more than $420 billion. ASML shares extended their losses on Wednesday, falling 5.0%.

The warning from Netherlands-based ASML halted a rally that had pushed a gauge of U.S.-traded stocks to its highest level in three months. Nvidia Corp. sank. rose nearly 5% on Tuesday, after hitting a record closing high earlier this week due to reduced concern about production issues with its latest artificial intelligence products.

ASML shares fell by the most since 1998 in Europe after the maker of the world’s most advanced chip-making machines cut its forecast for a slowdown in areas beyond artificial intelligence. It lowered the top end of its guidance range for total net sales for 2025 to 35 billion euros ($38 billion) from 40 billion euros.

While ASML’s outlook for 2025 was expected to be weak given the slowdown in non-AI applications as well as lower spending by Intel and other factors, “the size of the correction represents a negative surprise,” said Atif Malik, an analyst at Citigroup. “, he wrote in a note.

The situation was exacerbated by the lack of accompanying colors as the results were mistakenly released a day before the scheduled date. Shareholders are accustomed to the well-oiled investor relations machine of explaining how the business operates and the timing of orders, reservations, revenues and shipments. Investors will focus on the post-earnings call scheduled for 15:00 CET.

The collapse in ASML’s share price on Tuesday wiped about €50 billion off the company’s market value. This places it among the five largest single-day market capitalization surveys in Europe ever. It ranks alongside declines recorded by Nokia Oyj and Vodafone Group Plc when the dot-com bubble burst about 25 years ago.

Losses in Asian trading on Wednesday were led by ASML peers including Tokyo Electron Co Ltd, which fell as much as 10%. Shares of Taiwan Semiconductor Manufacturing Company, which reports results on Thursday, fell by as much as 3.3%.

Despite the market reaction, some investors believe ASML’s problems may be specific to the Dutch company. Demand for artificial intelligence remains active, and Beijing’s efforts to revitalize its economy are seen as helping to drive a broader recovery.

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“We believe chipmakers are strategically reducing ASML orders, and this is negatively impacting ASML’s earnings,” said Jung In-Yeon, CEO of Fibonacci Asset Management Global Pte. He said it was unclear whether the motivation was cost-cutting or other strategic reasons, also noting that stimulus from China could spur a rebound in chip demand.

–With assistance from Subrat Patnaik, Neil Campling, and Jean-Patrick Barnert.

(Adds ASML market capitalization context in seventh paragraph.)

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