Why ASML Stock Lost 18% in July

ASML shares dropped 18% in July as a dual wave of sector rotation and competitive anxiety overwhelmed solid quarterly results. The Dutch lithography giant beat second-quarter earnings expectations and raised full-year guidance, but investors focused instead on reports that Anthropic is developing its own AI chip—triggering a broader sell-off across semiconductor equipment names—and renewed concerns about Chinese competition in ultraviolet lithography machines.

The decline illustrates how rapidly sentiment can shift in the AI infrastructure trade. ASML's extreme ultraviolet (EUV) lithography systems remain critical for cutting-edge chip production, yet the July selloff suggests the market is pricing in both demand-side risk from vertical integration by AI developers and supply-side pressure from lower-cost Asian rivals in older lithography nodes.

Despite the raised guidance, the 18% monthly decline erased gains built earlier in the year and left bulls defending valuations that assume sustained capex from hyperscalers and foundries.