(Bloomberg) — Investors in chip stocks are facing new scrutiny after tepid prospects from key equipment supplier ASML Holding NV led to a global rout in the sector.
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The combined mark-to-market losses for an index of U.S.-traded chipmakers plus the largest Asian stocks totaled more than $420 billion.
The warning from Netherlands-based ASML threw cold water on the rising rally after a summer sell-off. Reduced concerns about production issues with Nvidia Corp.’s latest artificial intelligence product. had helped send the leading chipmaker’s shares to a new record high earlier this week.
Shares of ASML fell the most since 1998 in Europe after the maker of the world’s most advanced chip machines downgraded its view on slowness in areas outside AI. It lowered the top of its guidance range for total net sales in 2025 from €40 billion to €35 billion ($38 billion).
While a weak 2025 forecast was expected from ASML given sluggishness in non-AI applications and Intel Corp.’s lower spending. and other factors, “the magnitude of the correction is a negative surprise,” said Atif Malik, an analyst at Citigroup Inc. , wrote in a note.
The losses in the Asian trading day on Wednesday were led by ASML peers, including Tokyo Electron Ltd., which fell 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 may view ASML’s problems as specific to the Dutch company. Demand for AI remains high, and Beijing’s efforts to revive its economy are apparently helping fuel a broader recovery.
“We believe that chipmakers are strategically reducing orders for ASML, and this is negatively impacting ASML’s revenues,” said Jung In Yun, CEO of Fibonacci Asset Management Global Pte. Whether the driver is cost savings or other strategic reasons is unclear, he said, also noting that stimulus from China could trigger a recovery in chip demand.
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