ASML Holding N.V.

ASML Holding slipped to $1,745.42 on Wednesday as Nvidia's upcoming earnings became a key test for AI factory spending. ASML, which makes the lithography machines essential for chip production, reported second-quarter sales of 9.33 billion euros, a 54% gross margin, and net income of 2.92 billion euros. New-system sales rose to 86 machines from 67 in the prior quarter. Management guided third-quarter revenue between 11 billion and 12 billion euros and lifted its full-year target to 43 billion to 45 billion euros, implying a 23.3% jump at the midpoint. However, the stock trades 40.46% above its GF Value estimate of about $1,240, leaving little room for error if AI spending plans wobble.

Reports that Shanghai Aishengna Electronic Technology Group has begun producing immersion DUV systems sent shares of ASML Holding (ASML) down sharply, but the immediate threat to Applied Materials (AMAT) is overstated. Applied Materials does not make lithography systems; a Chinese immersion DUV machine competes directly with ASML, not with Applied Materials' deposition, etch, and other systems. However, China's directive requiring semiconductor manufacturers to use at least 50% domestically produced equipment when adding new capacity pressures Applied Materials' $4.2 billion annual China revenue. In fiscal Q1 2026, China accounted for $2.095 billion, or 29.9% of total revenue, and in Q2, $2.087 billion, or 26.4%. Six major Chinese equipment suppliers saw combined sales surge from $748 million in 2020 to $7.608 billion in 2025, and CXMT, a key DRAM maker, sources an estimated 40% to 50% of its tools domestically, potentially overtaking Micron in physical wafer capacity by 2030. While five initial DUV systems are too few to impact 2026 earnings, the longer-term risk is that China's domestic equipment ecosystem reduces Applied Materials' addressable market over several years.

Situational Awareness, the AI-focused hedge fund run by Leopold Aschenbrenner, invested $400 million in chip manufacturing startup Source Foundry, bringing its total stake to $500 million. The investment was made earlier this week, according to The Wall Street Journal. Source Foundry, founded by Stanford researchers Abdulmalik Obaid and Joe Burg, aims to develop next-generation machinery, tooling, and software for AI chip fabrication, directly challenging ASML Holding's dominance in extreme ultraviolet lithography. The startup was valued at $5 billion in a recent fundraising round and has previously raised at least several hundred million dollars from backers including Sequoia Capital. The deal comes weeks after Situational Awareness narrowly avoided collapse, selling the bulk of its public equity positions to Citadel after margin calls, while keeping its private portfolio intact.

Chipmaking startup Source Foundry has secured a $400 million investment from hedge fund Situational Awareness, bringing its total funding from that fund to $500 million and valuing the company at a reported $5 billion. The startup is developing lithography equipment for advanced AI chips, directly targeting a core area of ASML Holding's business. While the development does not affect ASML's current orders or earnings, it introduces a new competitive angle as serious capital backs an alternative approach in a market with historically high barriers to entry. Investors are now watching for concrete customer traction and technical milestones at Source Foundry that could signal a shift in competitive dynamics.

ASML shares fell 18% in July, pressured by competitive threats and a broader AI stock sell-off. The stock dropped 7.4% on July 1 after reports that Anthropic is developing its own AI chip, which could reduce demand for ASML's customers. A second-quarter earnings beat on July 15 briefly lifted shares, with revenue rising 21.2% to 9.33 billion euros and full-year guidance raised to 43 billion to 45 billion euros. However, the stock fell another 5.8% on July 27 following reports that China is making competing deep ultraviolet lithography machines.

Advanced Micro Devices shares fell over 8% on July 27, 2026, the steepest decline among peers, after Shanghai Aishengna announced production of homegrown immersion deep ultraviolet lithography systems. The sell-off spread across semiconductor stocks, with ASML also dropping 8%, despite AMD's core business metrics remaining strong. AMD's MI300 series and upcoming accelerators rely on TSMC's extreme ultraviolet lithography, which is exclusively supplied by ASML and beyond current Chinese capabilities, meaning the new DUV equipment does not affect AMD's supply chain or pricing power. Aishengna aims for just five units in 2026 compared to ASML's 130, and EUV remains inaccessible to domestic producers. The real vulnerability is AMD's elevated valuation, with a forward price-to-earnings ratio near 60, roughly double the industry median, and an EV/EBITDA in the upper 80s, making the stock susceptible to market shocks.

Bualuang Securities assesses that global stock markets remain volatile and at risk of further correction due to selling pressure in AI and semiconductor stocks, despite strong earnings from TSMC and ASML, reflecting concerns over stretched valuations. The correction is expected to be more of a re-rating rather than a change in fundamentals. The firm recommends further diversifying investments into the M-PROPERTY fund, which invests in REITs with high dividend yields of around 6 to 7 percent and limited downside. Meanwhile, it maintains a positive view on the FP USBANK-A fund, supported by strong capital market business trends and good credit quality.

Capital Economics told clients that the recent selloff in AI-linked tech giants is driven by fear rather than hard evidence, and it expects the rally to resume, at least for now. Chief Economic Adviser John Higgins cited several pressures, including the prospect of greater memory chip supply from Chinese heavyweights such as CXMT, which listed on Monday, potentially easing a shortage of mainstream memory chips and undermining revenue of big U.S. and Korean memory makers. Another worry is China's progress in the AI arms race, with news of China producing its own deep ultraviolet lithography machines hitting ASML shares, even though the Dutch firm's extreme ultraviolet machines are far more advanced. Chinese labs training near-frontier models at lower cost have also raised questions about whether U.S. hyperscalers can monetize their investments, and reports that Nvidia may provide about $250 billion in financing guarantees for OpenAI have revived concerns about circular finance. Capital Economics still expects the AI train to get back on track, with an end-2026 S&P 500 forecast of 8,250, but longer term it thinks earnings expectations that look exceptionally optimistic will be scaled back, forecasting the index to fall to 6,500 by end-2027.

China has started producing domestic immersion deep-ultraviolet lithography tools, with state-backed Shanghai Aishengna Electronic Technology Group planning to deliver machines to Semiconductor Manufacturing International, Hua Hong Semiconductor and memory producer ChangXin Memory Technologies, Reuters reported on July 28. Production is expected to remain small, at roughly five systems in 2026 and about 20 in 2027. The news struck ASML Holding through direct product substitution, as export controls already block its most advanced extreme-ultraviolet systems into China, leaving DUV scanners as the main lithography category available there; ASML said China generated 29 percent, or about 9.5 billion euros, of 2025 net sales, and Reuters Breakingviews noted that this revenue was associated with DUV machines and services. A domestic machine that passes production qualification could replace specific future ASML scanner orders and reduce Chinese fabs' dependence on ASML service, even if those fabs still prefer its performance. Micron Technology is connected through a named competitor and a manufacturing bottleneck, as CXMT, one of the intended tool recipients, competes in DRAM; if locally serviceable immersion DUV equipment eventually lets CXMT qualify and add reliable commodity-memory output despite tighter foreign-tool restrictions, the additional bits could pressure industry pricing and Micron's margins, representing a supply-curve risk rather than evidence that the new tools can already produce competitive high-bandwidth memory for leading AI accelerators.

Shares of Costco Wholesale, Verizon, and Kroger each gained roughly 2% on Tuesday as traders sold volatile semiconductor stocks and sought stability in defensive dividend payers. The rotation comes amid intensifying competition from Chinese chipmakers and growing doubts that AI spending will deliver promised returns, punishing companies like Alphabet for rising capital expenditures and threatening once-dominant tech leaders such as ASML Holding. Costco is up 13% in 2026, Verizon has gained 19% with free cash flow up 16% in the first half of the year, and Kroger is down 6% year-to-date, trading at about 11 times forward earnings as it cuts prices to attract at-home diners.

China's launch of a homegrown immersion deep ultraviolet lithography tool is spotlighting how ASML is being squeezed between U.S. export controls and Beijing's push for technological independence. Reuters reported that state-owned Shanghai Aishengna Electronic Technology Group is leading an effort to mass produce locally made immersion DUV tools, with plans for five units this year and 20 in 2027, far below ASML's 131 such systems shipped in 2025. ASML shares fell some 10% in two days, wiping more than €60 billion off its market value, though JPMorgan analysts argued medium-term damage will be limited. The development underscores how tougher U.S. rules could backfire by creating a business case for Chinese lithography, even if the new machine will need improvement to match ASML's yield and throughput. ASML expects about 20% of revenue, or around €9 billion, from China this year, but U.S. legislation could block remaining immersion DUV exports, pushing Chinese chipmakers toward domestic alternatives.

US-listed shares of memory and storage leaders Micron Technology, SK Hynix, and Sandisk all fell more than 5% on Tuesday as a semiconductor sell-off deepened. The PHLX Semiconductor Index fell more than 2% in the previous session, with AI chip heavyweight Nvidia losing 0.5% in premarket trading after a 5% drop on Monday, while AMD was set to open 4% lower and Broadcom, Intel, Marvell, and Qualcomm slid more than 2%. The declines followed sharp losses abroad, where SK Hynix fell more than 14% in South Korea and Samsung Electronics dropped more than 13%, while European semiconductor stocks also moved lower amid concerns about circular financing and intensifying competition from China. A blockbuster IPO by Chinese memory maker CXMT in Shanghai renewed investor worries that its rapid expansion could weigh on memory chip prices, and a report that a Chinese state-backed company began mass-producing a key piece of chipmaking equipment fueled a sell-off in ASML shares. Semiconductor stocks have tumbled more than 20% from their June record highs as investors grow skeptical about the payoff from massive AI infrastructure spending, with Alphabet shares plummeting last week after it raised its capital spending outlook, and markets now await earnings from Microsoft, Amazon, and Meta for further signs of increased AI-related spending.

Nvidia fell 5% on Monday as investors questioned the funding structure behind the artificial intelligence infrastructure boom. The decline followed a report that Nvidia was discussing about $250 billion in financing guarantees for an OpenAI data center, with separate talks reportedly involving financing up to $350 billion in OpenAI chip purchases. The selloff spread across Asia on Tuesday, with South Korea's KOSPI dropping nearly 10% and triggering a circuit breaker, while Japan's Nikkei fell 4.4%. European chip stocks also came under pressure, with ASML sinking 8.5% after a report that China had begun producing its own immersion deep ultraviolet lithography machines. The market reaction comes before earnings from Apple, Meta, Microsoft and Amazon, which could offer clearer signals on future AI infrastructure spending.

A global selloff in semiconductor stocks intensified on Tuesday amid growing concerns over rising competition and circular financing, ahead of critical earnings reports from major tech companies. U.S. chip giant Nvidia saw its shares drop sharply, partly on reports of another round of circular financing with OpenAI, while China's CXMT surged nearly 470% in its first-day IPO, unveiling a new chip giant ready to absorb investment funds. European tech leader ASML fell sharply on reports that Chinese firms are developing chipmaking technology that mimics its dominant offering. South Korea's SK Hynix saw its U.S.-listed shares fall below their recent debut price ahead of its quarterly update, and Seoul's KOSPI index plummeted nearly 11% to post its biggest daily loss in nearly five months, with rival Samsung Electronics also down sharply ahead of its own report this week. The selloff comes despite a further slump in oil prices below $90 per barrel amid a tense pause in the Iran conflict, and as the Federal Reserve begins a two-day policy meeting with markets pricing in a one-in-three chance of a rate hike.

Shares of memory and AI-related stocks fell in premarket trading on Tuesday after Japan's Nikkei 225 dropped about 3.95% and South Korea's Kospi Index sank 10.84%. Memory maker Kioxia plummeted around 18.3%, Tokyo Electron tumbled about 11%, and Advantest slumped nearly 10% in Japan, while SK hynix fell about 15% and Samsung Electronics slumped nearly 13% in South Korea. Analysts cited concerns over AI infrastructure financing, China's technological advances, and growing competition, with Kiwoom Securities' Han Ji-young noting that reports of a Chinese company developing domestic DUV lithography systems reignited fears of accelerated capacity expansion by Chinese memory-chip makers. CXMT's strong stock-market debut on Monday added to oversupply worries, though Mercer Investments' Cameron Systermans said CXMT is likely years behind South Korean competitors in High-Bandwidth Memory. In the US, Micron Technology fell around 5%, Nvidia dipped about 1% after a report on its $19.6 billion lease commitment for a Texas data center, and chip equipment makers ASML, Applied Materials, Lam Research, and KLA all declined.

Global tech stocks plunged after China achieved a breakthrough in developing deep ultraviolet lithography machines critical to AI chip manufacturing. South Korea’s Kospi index fell nearly 11 percent overnight, triggering a brief trading halt, while Japan’s Nikkei and Taiwan’s Taiex each sank more than 4 percent. The sell-off was sparked by reports that Chinese state-owned Shanghai Yuliangsheng has begun mass-producing the machinery, with leading Chinese chipmakers expected to receive first deliveries later this year. ASML shares dropped more than 8 percent, ASM International fell over 7 percent, and BE Semiconductor declined nearly 10 percent. Samsung and SK Hynix each plunged more than 12 percent, leaving the Kospi on track for its worst month since 1997.

Global tech stocks plunged after China achieved a breakthrough in developing machinery crucial to the AI boom. Trading was briefly halted on South Korea's benchmark Kospi index, which collapsed more than 10pc overnight in a worldwide sell-off of semiconductor companies. The downturn was triggered by reports that China's Shanghai Yuliangsheng has begun mass production of deep ultraviolet lithography tools critical to the manufacture of advanced microchips, a technology previously dominated by Western chip giants. Shares in ASML, Europe's most valuable company and a leading manufacturer of the technology, fell more than 8pc on Monday, while Japan's Nikkei and Taiwan's Taiex stock markets both declined more than 4pc. South Korea's chipmakers Samsung and SK Hynix each plunged more than 12pc, and have fallen almost 50pc since hitting all-time highs last month, with the Kospi down more than 30pc. Stephen Innes of SPI Asset Management said the downturn was not a sign that demand for semiconductors has collapsed, but rather that the market's willingness to capitalize AI promises at almost any price has changed. On Wall Street, Nvidia plunged 5pc, wiping $250bn off its valuation, while Sandisk tanked 11pc and AMD fell 5pc.

Wall Street ended mixed, with the Dow Jones Industrial Average gaining 262.83 points to close at 52,210.08, while the Nasdaq fell 43.74 points. Investors are awaiting earnings from major tech companies such as Microsoft, Amazon, Meta, and Apple this week, amid concerns that the AI bubble may be starting to deflate. Brent crude oil prices tumbled 8.7% to 88.36 dollars per barrel after the US suspended strike operations against Iran, dragging energy stocks lower, led by Occidental Petroleum down 4.1% and Exxon Mobil down 1.4%. European markets closed flat, with the STOXX 600 edging up just 0.02%, as ASML shares plunged 8.4% following reports that China has developed its own DUV lithography chipmaking tools, weighing on tech peers ASM International and BE Semiconductor.

European stock markets closed only slightly higher on Monday, with the STOXX 600 index edging up 0.02% to 644.62 points, as falling technology stocks capped market gains despite easing tensions in the Middle East and a sharp drop in oil prices. Energy stocks fell 2%, making them the worst-performing sector in the STOXX 600, after West Texas Intermediate crude for September delivery dropped 7.5% to settle at 82.61 dollars a barrel and Brent crude fell 8.7% to 88.36 dollars a barrel, amid hopes for peace talks between the United States and Iran. The European technology index declined 1.7%, led by ASML, which tumbled 8.4% following reports that China has begun producing domestically developed deep ultraviolet chipmaking equipment, a technology long dominated by ASML. ASM International dropped 7.1% and BE Semiconductor plunged 9.7%. Investors are watching earnings reports from major US technology companies this week and the Federal Reserve's monetary policy meeting, with the CME Group's FedWatch Tool indicating a 62% probability that the Fed will hold interest rates at 3.50% to 3.75% at its July 28-29 meeting.