Global chip stocks evaporated $420 billion after ASML's sales warning. Chip stock investors are facing a new test as the lackluster prospects of the primary equipment supplier, ASML Holding NV, have triggered a global plunge in the industry.

The total market value loss of US-traded chip manufacturers and Asia's largest stocks reached over $420 billion. ASML's stock price continued to fall on Wednesday, dropping by 5.0%.

The warning issued by ASML, based in the Netherlands, prevented the rebound that pushed the US-traded stock index to a three-month high. Nvidia Corp. fell nearly 5% on Tuesday after setting a closing record earlier in the week due to alleviated concerns about production issues with its latest AI products.

ASML's stock price in Europe hit the largest drop since 1998 after the global leader in advanced chip manufacturing machine manufacturers lowered expectations for sectors outside of AI development. The company revised its upper limit for total net sales in 2025 from 40 billion euros to 35 billion euros ($38 billion).

Citigroup analyst Atif Malik wrote in a report that despite ASML's 2025 forecast possibly being weaker due to slowdown in non-AI applications and reduced spending by Intel, among other factors, the extent of this adjustment was surprising.

Due to the early release of results one day ahead of schedule and the lack of corresponding performance, the situation worsened. Shareholders are accustomed to well-oiled investor relations institutions interpreting business operations as well as the timing of orders, bookings, revenue, and shipments. Investors will focus on the earnings conference call scheduled for 15:00 Central European Time.

On Tuesday, ASML's stock plummeted, causing the company's market cap to evaporate by about 50 billion euros. This makes it one of the largest five companies in Europe in terms of market cap evaporation in history. This decline is comparable to the declines seen with Nokia and Vodafone Group during the burst of the internet bubble 25 years ago.

During Wednesday's Asian trading session, ASML led the decline along with Tokyo Electron Ltd., with a drop reaching 10% at one point. TSMC, the top chip foundry set to announce earnings on Thursday, saw its stock price fall by 3.3% at one point.

Although the market reaction is intense, some investors believe that ASML's predicament may be limited to this Dutch company. The demand for artificial intelligence remains strong.

Fibonacci Asset Management Global Pte CEO Jung In Yun stated: "We believe that chip manufacturers are strategically reducing ASML's orders, which has a negative impact on ASML's earnings.”