Chip stock investors face new test after key equipment supplier’s dovish forecast ASML Holding NV (ASML), which caused a global decline in the sector. This is key for the Cedear of the firm that is listed in the local market.
Combined losses in the market value of an index of US-listed chipmakers, along with the largest Asian stocks, reached more than $420 billion. ASML shares extend Tuesday’s fall and fall this Wednesday by more than 5%, but in the premarket they held the 16% of the previous session.
The warning from Netherlands-based ASML halted a rally that had taken an index of U.S.-listed stocks to a three-month high. As Ámbito reported, Nvidia Corp. (NVDA) fell nearly 5% on Tuesdayafter hitting a record close earlier in the week as concerns eased over production issues with its new artificial intelligence product.
ASML shares fell in Europe by the most since 1998, after the maker of the world’s most advanced chip-making machines cut its forecast due to slowness in areas beyond artificial intelligence. It lowered the top end of its guidance range for 2025 total net sales to 35 billion euros ($38 billion) from 40 billion.
While a weak 2025 forecast from ASML was expected due to slowness in non-AI applications, as well as reduced spending by Intel Corp. and other factors, “the magnitude of the correction is a surprise.” negative,” Atif Malik, an analyst at Citigroup Inc., wrote in a note.
What is happening in the semiconductor market
Compounding the situation, no additional information was provided when the results were mistakenly released a day ahead of schedule. Shareholders are accustomed to a well-organized investor relations process to explain how the business works and the scheduling of orders, reservations, revenues, and shipments. Investors will focus on the post-earnings call, scheduled for 15:00 CET.
The collapse of ASML’s share price on Tuesday wiped approximately €50 billion off the company’s market value, placing it among the five largest single-day market capitalization losses in Europe. It is among the declines recorded by Nokia Oyj and Vodafone Group Plc when the internet bubble burst about 25 years ago.
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The collapse of ASML’s share price on Tuesday wiped approximately €50 billion off the company’s market value.
Losses in Asian trading 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 will report results on Thursday, fell as much as 3.3%.
Despite the market reaction, some investors see ASML’s problems as possibly specific to the Dutch company. Demand for AI remains strong and Beijing’s efforts to revive its economy are expected to help a broader recovery.
“We believe that chipmakers are strategically reducing orders for ASML, and this is negatively affecting ASML’s profits,” said Jung In Yun, CEO of Fibonacci Asset Management Global Pte. Whether the cause is cost cutting or other Strategic reasons are unclear, he noted, also adding that China’s stimulus could fuel a rebound in chip demand.
Source: Ambito
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