Chipmakers tumble as ASML forecast cut issues a growth warning to the sector

• Chip stocks tumbled Tuesday, with NVDA and AMD down 5% and ASML plunging 16%.
• The downturn came as ASML lowered its 2025 sales guidance.

Semiconductor stocks fell Tuesday after ASML slashed guidance for next year, and as the sector mulled reports that the US was weighing a cap on chip exports from some American companies.

ASML, Europe's most valuable tech company, plunged 16% in its biggest single-day drop since 1998. Other chip stocks followed, with NVDA dipping almost 5%, AMD falling 5.3%, and Broadcom tumbling 3.5% around midday Tuesday.

SMCI, meanwhile, fell as much as 3.4% earlier in the day before paring most losses.

The industry's downturn comes after ASML, a Dutch chip machine maker, posted a downbeat earnings report and cut its sales guidance for next year. The report's forward guidance lowered total net sales for 2025 to between €30 billion and €35 billion, the lower half of the previously stated range, citing weak demand from chipmakers for its machinery.

"It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness," CEO Christophe Fouquet said in a statement.

ASML's third quarter bookings were €2.6 billion, coming in under half the average estimate of €5.39 billion, according to a Bloomberg survey.

The report was posted a day earlier than expected, adding to the surprise of the results and lower guidance.

Flows into AI stocks slowed over the summer as investors expressed worries about returns on huge spending on AI. Investment in the sector has rebounded in recent weeks, though, propelling Nvidia to a fresh high on Monday to help the S&P 500 hit another record close.

Reports that the US is weighing a cap on chip exports from American chipmakers only compounded the industry's tumultuous start to the week.

According to Bloomberg, the Biden administration has been in talks to cap sales of advanced AI chips from some American chip companies—including Nvidia—to certain countries in order to protect national security.

The plans would likely target Persian Gulf countries, which are increasingly interested in AI, sources told the outlet, and would build on existing restrictions that originally set out to curb China's progress in AI.

Previously implemented restrictions have regulated chip shipments to over 40 countries in the Middle East, Africa, and Asia to prevent chip technology from flowing to China.