UPDATE: ASML’s stock has plunged nearly 9% after CEO Christophe Fouquet cast doubt on the company’s future growth amidst escalating tariffs and geopolitical tensions. The unexpected downturn has sent shockwaves through the already volatile AI supply chain, raising urgent questions about the industry’s stability.
The U.S.-China tariff battle has intensified, with authorities implementing 25% tariffs on semiconductors and related tools. China has retaliated with 34% duties on U.S. chip exports, complicating operations for major players like ASML, Nvidia, and AMD. As costs surge, the path to AI innovation is increasingly treacherous.
Recent months have seen the AI sector grapple with rising expenses and regulatory hurdles. For instance, Nvidia faced a staggering $4.5 billion writedown on its H20 chips bound for China after an export ban was enacted in April. Meanwhile, AMD is struggling to secure export licenses for its MI308 processors to regain access to Chinese data centers, further complicating the supply chain.
The pain isn’t limited to AI chipmakers. U.S. giants like Applied Materials and Lam Research are bracing for over $1 billion in annual losses due to the tariffs. This rising financial pressure is jeopardizing research and development at a time when demand for next-gen AI hardware is soaring.
Despite reporting robust earnings for Q2, ASML’s forecast adjustments have alarmed investors. The company announced net sales of €7.7 billion, surpassing the expected €7.52 billion, and a profit of €2.29 billion, exceeding the €2.04 billion guidance. However, the outlook for Q3 has fallen short, with projected sales between €7.4 billion and €7.9 billion, lower than the €8.3 billion consensus.
Fouquet highlighted “increasing uncertainty driven by macro-economic and geopolitical developments” as a key factor in the revised projections. The shift in tone is stark compared to last November when ASML anticipated 2026 as a major growth year. Now, the CEO stated, “We cannot confirm it at this stage.”
Investor sentiment is shaken as the AI landscape faces unpredictable tariffs and political maneuvering. ASML’s U.S. customers, including industry giants like Intel and TSMC, are directly impacted, leaving investors on edge as they monitor ongoing trade discussions.
As the situation evolves, all eyes will be on the White House and its forthcoming decisions that could further disrupt the AI supply chain. The ramifications of these tariffs are being felt across the industry, and with trade talks ongoing, investors must remain vigilant for any breaking news that could influence stock performance.
For now, ASML’s guidance retreat has rattled even the most optimistic investors, underscoring the fragility of the AI sector in light of these unprecedented challenges. The future of AI innovation hangs in the balance as tariffs continue to reshape the landscape.