Global chip stocks wipe $420 billion after ASML sell warning

(Bloomberg) — Investors in chip stocks are facing a fresh gut check after a dovish outlook from major equipment supplier ASML Holding NV caused global havoc in the sector.

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The combined market value loss for US-traded chipmakers and an index of the largest Asian stocks reached more than $420 billion. Shares of ASML extended losses by falling 5.0% on Wednesday.

The warning from Netherlands-based ASML halted a rally that pushed a gauge of US-traded shares to a three-month high. Nvidia Corp sank nearly 5% on Tuesday, nearing a record high earlier this week after concerns over manufacturing problems with its new artificial intelligence product eased.

Shares in ASML fell the most since 1998 in Europe after the maker of the world's most advanced chipmaking machines played down its outlook for sluggishness in areas outside of AI. It lowered the top end of its guidance range for total net sales in 2025 from €40 billion to €35 billion ($38 billion).

While a weaker 2025 forecast from ASML was expected due to a slowdown in non-AI applications as well as reduced spending by Intel Corp. and other factors, “the magnitude of the revision is a negative surprise,” Atif Malik, an analyst at Citigroup Inc. , wrote in a note.

The accompanying lack of color exacerbated the situation as the results were incorrectly published a day ahead of schedule. Shareholders are used to the well-oiled machine of investor relations explaining business performance and timing of orders, bookings, revenues and shipments. Investors will focus on the post-earnings call scheduled for 15:00 CET.

Tuesday's collapse in ASML's share price wiped almost €50 billion off the company's market value. This places it among the five largest single-day market capitalization wipes in Europe. That ranks alongside plunges recorded by Nokia Oyj and Vodafone Group Plc when the Internet bubble burst nearly 25 years ago.

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

Despite the market reaction, some investors see ASML's problems as potentially specific to the Dutch company. AI demand remains sharp and Beijing's efforts to revive its economy appear to be aiding a broader recovery.

“We believe chipmakers are strategically reducing ASML's orders and this is negatively impacting ASML's earnings,” said Jung In Yoon, chief executive officer of Fibonacci Asset Management Global Pte. Whether cost-cutting or other strategic factors are the driver is unclear, he said, noting that stimulus from China could lead to a rebound in chip demand.

–With assistance from Subrata Patnaik, Neil Campling and Jan-Patrick Barnert.

(ASML adds context of market capitalization in paragraph 7.)

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