(Bloomberg) — Investors in semiconductor stocks are facing a new test of courage after a lackluster outlook for major equipment supplier ASML Holding NV triggered a global sell-off in the sector.
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The combined market capitalization loss of an index of U.S.-traded semiconductor manufacturers and Asia's largest stocks amounted to more than $420 billion.
Netherlands-based ASML's warning poured cold water on the bull market after a sharp summer selloff. Decreasing concerns about production problems with Nvidia Corp.'s latest artificial intelligence products helped push the major chipmaker's stock to a new record earlier this week.
ASML shares suffered their steepest decline in Europe since 1998 after the maker of the world's most advanced chip-making machinery lowered its outlook for weakness in areas other than AI. It lowered the upper end of its guidance range for total net sales in 2025 from 40 billion euros to 35 billion euros ($38 billion).
ASML had expected a weaker forecast for 2025 given factors such as a slowdown in non-AI applications and Intel's spending cuts, but “the magnitude of the revision is a negative surprise,” Citigroup analysts said. , said Atif Malik. I wrote it in my notes.
Losses in Asian trading on Wednesday were led by ASML's peers, including Tokyo Electron, which fell as much as 10%. Shares of top foundry company Taiwan Semiconductor Manufacturing Co., Ltd., which will report earnings on Thursday, fell as much as 3.3%.
Despite the market reaction, some investors believe ASML's woes may be unique to the Dutch company. Demand for AI remains strong, and China's economic recovery efforts are expected to contribute to a broader recovery.
“We believe semiconductor manufacturers are strategically reducing orders to ASML, which is having a negative impact on ASML's revenue,” said Jeong In Yoon, chief executive officer of Fibonacci Asset Management Global. ” he said. He said it's unclear whether the driver is cost-cutting or other strategic reasons, but added that stimulus from China could spur a recovery in semiconductor demand.
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