ASML (ASML, Financial) issued a disappointing earnings forecast, leading to a global sell-off in semiconductor stocks with a total market value reduction of over $420 billion. The warning has disrupted the recovery in chip stocks, which had been bouncing back from a summer sell-off. Earlier, NVIDIA (NVDA) shares hit a new high as concerns over production issues for its latest AI products had subsided.
ASML unexpectedly released its quarterly report earlier than scheduled, revealing third-quarter results that met sales and gross margin expectations but fell significantly short in terms of orders, prompting a downward revision of next year's sales target. This led to ASML experiencing its largest stock price drop in European markets since 1998.
Analysts from Citigroup, led by Atif Malik, noted that the sluggish development in non-AI applications and spending cuts by Intel are expected to weaken ASML's 2025 forecast more than previously anticipated.
During Asian trading, semiconductor stocks, including Tokyo Electron, saw a sharp decline of up to 10%. Meanwhile, Taiwan Semiconductor Manufacturing Company (TSMC), set to release its results on Thursday, saw its shares drop by as much as 3.3%.
Despite ASML's challenges, some investors believe the issues might be specific to the company. AI demand remains robust, and China's economic policies are viewed as beneficial for broader recovery. Fibonacci Asset Management Global's CEO, Jung In Yun, suggested that chipmakers might be strategically cutting orders from ASML, impacting its earnings. The motivations behind these cuts remain uncertain, but China's economic stimulus might stimulate a rebound in chip demand.
