Market Jitters as ASML Lowers 2026 Growth Outlook Amid Tariff Concerns

European shares saw a slight decline on Wednesday, with the STOXX 600 index falling by a third of a percentage point. Leading the losses was ASML, the world's primary provider of chip-making equipment, whose stock dropped by over six percent. The company, a key supplier to industry giants like TSMC and Intel, indicated that confirming growth for 2026 is uncertain due to prevailing macroeconomic and geopolitical factors, even as its second-quarter bookings outpaced market predictions.

ASML's second-quarter performance included total net sales of €7.7 billion and net income reaching €2.3 billion. The firm recorded strong new orders totaling €5.5 billion, surpassing the average analyst estimate of €4.8 billion. This robust demand was largely driven by the surge in artificial intelligence investments, which are boosting the need for advanced chip manufacturing tools. CEO Christophe Fouquet noted the enduring strength of AI client fundamentals for the upcoming year.

However, these positive financial figures were overshadowed by wider market apprehensions. A weakening outlook for European corporate health is emerging, partly due to President Trump's recent statements on tariffs. Elevated U.S. inflation figures have further fueled concerns about tariff-induced price increases. Attention is now on forthcoming U.S. producer price data for more clues on trade's economic impact, while investors also await developments in U.S.-EU trade discussions, as the European Union is preparing counter-measures if talks fail.

Within the market, European technology shares decreased by more than one percent, and automotive stocks also declined by about one percent. Compounding these economic pressures, Britain's annual consumer price inflation unexpectedly rose in June to 3.6%, up from 3.4% in May, marking its highest level in over a year.

ASML's Chief Financial Officer, Roger Dassen, pointed out the potential impact of tariffs on new systems and components sent to the U.S., alongside the risk of retaliatory measures from other countries, which could also negatively affect ASML's gross margin. Although semiconductor products currently avoid U.S. tariffs, the treatment of chip-making equipment remains uncertain.

Looking ahead, ASML forecasts third-quarter net sales between €7.4 billion and €7.9 billion, with a gross margin ranging from 50% to 52%. For the full year 2025, the company projects a sales increase of about 15% from 2024, maintaining a gross margin of approximately 52%. Despite the revised 2026 outlook, ASML is positioned to benefit from substantial investments in AI data centers, being the sole manufacturer of critical extreme ultraviolet lithography machines essential for cutting-edge chip production.