Shares of EUV monopolist ASML Holdings (ASML +1.67%) fell on Tuesday, declining as much as 4.7%, before recovering to a 3.3% decline on the day.
ASML's stock had peaked around April 14, at which point it had already risen 30% on the year. The company has had a strong run on the back of booming EUV machine sales, not only to leading AI chipmakers, but also memory companies that are now using the latest EUV machines.
Last night, however, the Wall Street Journal reported that AI model firm OpenAI had missed its user and revenue targets. That sent virtually all AI infrastructure stocks into the red today, especially those that had been big winners this year-to-date.
NASDAQ: ASML
Key Data Points
OpenAI fears ripple through the semiconductor world
Last night, The Wall Street Journal reported that OpenAI's CFO, Sarah Friar, recently said the AI company had missed its targets for new user growth and revenue, and that she was also concerned about OpenAI's ability to pay for the massive computing commitments it had made going forward.
According to people familiar with the matter, Friar and OpenAI's Board of Directors are in conflict with CEO Sam Altman over the need to more closely scrutinize AI computing deals. However, Altman and Friar then issued a joint statement to the Journal, saying that the story was "ridiculous" and that the two are working to bring on more computing every day.
Despite the denial, the story sent the entire semiconductor sector down markedly. Semi stocks have, by and large, done very well this year due to the AI infrastructure build-out, including ASML. Therefore, if the current model leader in terms of users and revenue were to pull back from its large spending commitment, the theory is that data center and semiconductor revenues may decelerate with it.
Image source: Getty Images.
Investors probably shouldn't worry long-term
Before anyone panics, there is a good reason to stick with semiconductor stocks and ASML over the long term. If OpenAI is missing growth goals, it's likely due to market share losses to competitors such as Anthropic and Google (GOOG +2.47%) (GOOGL +2.50%), each of which has made its model much more competitive in the last six months. These two companies also appear to be teaming up to take on OpenAI.
But shifting market share doesn't mean AI adoption is slowing. Meanwhile, whichever company or handful of companies emerges victorious in the AI wars will still use advanced logic chips and memory, both of which are produced with ASML's advanced lithography machines.
Therefore, today's sell-off seems like a short-term round of profit-taking on the uncertainty, rather than something bigger.
