Nasdaq & Chip Stocks Fall After ASML Shares Slump 16%

After record highs for Wall Street on Monday, 14 October, the Nasdaq index led declines on Tuesday, dragged down by major tech stocks like ASML and Nvidia. 

Nasdaq & Tech Stocks Roll Over

The Nasdaq 100 index fell -1.37%, while the Dow Jones Industrial Average fell 0.8% a day after hitting 43,000 for the first time with the S&P 500 also down around 0.8%.

US-listed ASML (ASML.AS) shares dropped 16.23%, dragging down leading chip stocks including Nvidia (NVDA) which fell 4.7%. Nvidia lasted only one day as the world’s most valuable company after briefly dethroning Apple (AAPL).

What Happened to ASML Stock? 

The fall in ASML’s stock price followed weak sales guidance from Dutch semiconductor supplier ASML Holding N.V in its quarterly earnings that were accidentally released a day early. This dour message, alongside the surprise at the early report, saw a vigorous reaction from investors.

Source: Plus500.com

Tuesday marked the biggest one-day fall in ASML stock since its stock market debut in 2002. 

The leading European semiconductor manufacturer revised its 2025 net sales projection to a range of €30 billion to €35 billion, a reduction from the earlier estimate of €30 billion to €40 billion announced during its 2022 Investor Day.

ASML, Europe’s highest-valued tech firm, is the leading supplier of precision chip making equipment used by Taiwan Semiconductor Manufacturing Company (TSMC), Intel, and Samsung Electronics to manufacture their most cutting-edge semiconductors. The weak guidance doesn’t bode well for the firm’s customers who happen to be some of the largest technology companies, and in the case of Nvidia, one of the top-performing stocks this year.

Explaining the source of the lower estimates, ASML’s President and Chief Executive Officer  Christophe Fouquet said: "While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover." (Source: Euronews)

Tech Stocks, Nvidia Put Under Pressure

It was a quick reversal of optimism from the previous day when Nvidia stock led a rise across major US stock indices which helped the Dow Jones and S&P 500 reach new record highs. 

Weakness in the Dow was led by an 8.1% fall in UnitedHealth Group Inc. after poorly received quarterly results; however, it was all about chip stocks for the Nasdaq.

Adding to the woes from ASML, a report that the Biden Administration is considering a cap on Artificial Intelligence chip exports piled pressure on US chipmaker Nvidia. According to the Bloomberg report, Biden administration officials have recently considered imposing limits on export licences for advanced AI chips, including those from Nvidia to certain Middle Eastern countries due to national security concerns.

In the semiconductor sector, Advanced Micro Devices (AMD) saw its shares drop 4.9%, while Micron Technology (MU) decreased by 3.5%, and Broadcom (AVGO) also fell by 3.5% on Tuesday.

Conclusion: What’s Next for the Nasdaq and S&P 500?

Looking ahead, earnings season could continue to be the biggest driver for US stock indices as well as for leading US tech stocks. According to FactSet For Q3 2024, the S&P 500 is expected to post a year-over-year earnings growth rate of 4.1%, which if it holds, will represent the fifth consecutive quarter of annual earnings growth for the index.

The disappointing results from ASML could be a warning sign of what’s to come or a flash in the pan of what was otherwise strong growth in corporate profits.