Chip investors around the world are feeling the heat as a cautionary outlook from key equipment supplier ASML Holding NV triggers a global sell-off in the sector. The value of chip stocks in both the US and Asia dropped by more than $420 billion as a result.
ASML’s warning put a halt to the recent rally that had propelled US chip stocks to a three-month high. Nvidia Corp. saw a nearly 5% decline after hitting a record high earlier in the week, driven by concerns over production issues with its latest AI product.
The Dutch company ASML experienced its biggest share price drop since 1998 after revising its 2025 sales outlook due to sluggishness in non-AI areas. Despite expectations of a weak forecast, the magnitude of the correction came as a negative surprise to many analysts.
In Asia, ASML’s peers like Tokyo Electron Ltd. and Taiwan Semiconductor Manufacturing Co. also suffered losses as a result of the market reaction. However, some investors believe ASML’s troubles may be specific to the company, as demand for AI remains strong and China’s economic revival efforts are expected to boost the overall industry.
“We believe chipmakers are strategically reducing orders for ASML, and this is negatively affecting ASML’s earnings,” said Jung In Yun, CEO at Fibonacci Asset Management Global Pte. While the exact reasons behind the slowdown are unclear, the potential for a rebound in chip demand with Chinese stimulus measures in place remains a possibility.
For the latest updates on the global chip market and insights on how investors are navigating the current challenges, stay connected with Extreme Investor Network. Subscribe to our newsletter for exclusive content and expert analysis to help you make informed investment decisions in the fast-paced world of finance.