(Bloomberg) — Investors in chip stocks are facing a fresh gut check after a tepid outlook from key equipment supplier ASML Holding NV sparked a global rout in the sector.

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Combined market value losses for an index of US-traded chipmakers plus the largest Asian stocks reached more than $420 billion. Shares in ASML extended losses on Wednesday, falling 5.0%.

The warning from Netherlands-based ASML halted a rally that had pushed a gauge of US-traded shares to a three-month high. Nvidia Corp. sank nearly 5% on Tuesday, after reaching a record close earlier this week on reduced concern over production issues with its newest artificial intelligence product.

ASML’s shares tumbled by the most since 1998 in Europe after the manufacturer of the world’s most advanced chipmaking machines cut its outlook on sluggishness in areas beyond AI. It lowered the top end of its guidance range for 2025 total net sales to €35 billion ($38 billion) from €40 billion.

While a weak 2025 forecast was expected from ASML given slowness in non-AI applications as well as reduced spending by Intel Corp. and other factors, “the magnitude of the correction is a negative surprise,” Atif Malik, an analyst at Citigroup Inc., wrote in a note.

Exacerbating the situation was the lack of accompanying color as the results were released mistakenly a day earlier than scheduled. Shareholders are accustomed to the well-oiled machine of investor relations to explain the workings of the business and timing of orders, bookings, revenues and shipments. Investors will focus on the post-earnings call scheduled for 15:00 CET.

Tuesday’s collapse in the share price of ASML erased about €50 billion from the company’s market value. That places it among Europe’s five biggest single-day market capitalization wipeouts ever. It ranks alongside the plunges recorded by Nokia Oyj and Vodafone Group Plc when the internet bubble burst some 25 years ago.

Losses in Asian trading Wednesday were led by ASML peers including Tokyo Electron Ltd., which slid as much as 10%. Shares of top foundry Taiwan Semiconductor Manufacturing Co., which reports results Thursday, fell as much as 3.3%.

Despite the market reaction, some investors see ASML’s woes as possibly specific to the Dutch company. AI demand remains brisk and Beijing’s efforts to revive its economy are seen helping a broader recovery.

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“We believe chipmakers are strategically reducing orders for ASML, and this is negatively affecting ASML’s earnings,” said Jung In Yun, chief executive officer at Fibonacci Asset Management Global Pte. Whether the driver is cost cutting or other strategic reasons is unclear, he said, noting also that stimulus from China may spur a rebound in chip demand.

–With assistance from Subrat Patnaik, Neil Campling and Jan-Patrick Barnert.

(Adds ASML market capitalization context in paragraph seven.)

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