The Dow and the Nasdaq slump as ASML leads a chip stock rout

In the afternoon, the Dow Jones Industrial Average dropped 118 points, or 0.28%, to 42,939. The tech-heavy Nasdaq $NDAQ and S&P 500 shed 0.8% and 0.4%, respectively.

Shares of Dutch semiconductor equipment manufacturer ASML $ASML (ASML) plummeted following the company’s disappointing third-quarter bookings and a downward revision of its 2025 guidance. During afternoon trading, ASML’s stock dropped by more than 16%, reflecting investors’ concerns about the company’s outlook.

“While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover,” CEO Christophe Fouquet said in the company’s earnings report. “It now appears the recovery is more gradual than previously expected.”

ASML is the only company in the world that makes the equipment needed for advanced chip manufacturing, and nearly half of ASML’s revenue for the second quarter came from sales to China. However, due to export restrictions from the U.S. and the Netherlands, the company is now facing a more challenging business outlook in China.

Nvidia stock falls as the U.S. eyes AI chip export limits

Shares of Nvidia $NVDA (NVDA) fell over 5% Tuesday, a day after after closing at a record high. The chipmaker’s stock was down less than 1% in pre-market trading, but had fallen by about 5% by midday.

The drop occurred following a report that the U.S. could cap sales of advanced artificial intelligence chips from U.S.-based chipmakers to certain countries. Biden administration officials in recent weeks have discussed putting a ceiling on export licenses for advanced AI chips, including those from Nvidia and rival AMD $AMD (AMD), to countries in the Middle East, citing national security concerns, Bloomberg reported.

Among major semiconductor stocks, Advanced Micro Devices (AMD) fell by 4.9%, Micron $MU Technology (MU) declined by 3.5%, and Broadcom $AVGO (AVGO) decreased by 3.5% on Tuesday.

–Britney Nguyen contributed to this article