ASML Stock Tumbles 6% As Investors Weigh China Risk — But Wall Street And Retail Investors Dismiss Selloff

• JPMorgan told investors the selloff “seems disproportionate to what has been indicated in the report.”
• The firm stressed that producing a limited number of immersion DUV tools does not equate to delivering equipment ready for high-volume manufacturing. 
• A Stocktwits user pinned the selloff on the stock’s high valuation.

Shares of Dutch chip-equipment maker ASML Holding (ASML) closed 6% lower on Monday following a report that China has begun producing domestic immersion deep ultraviolet (DUV) lithography machines, tools long dominated by the company.

The move followed a report from The Information that an unnamed state-backed Chinese manufacturer has started building these systems. However, Wall Street, as well as retail investors, dismissed the selloff.

Wall Street Sees Overreaction

JPMorgan told investors the selloff “seems disproportionate to what has been indicated in the report.” The firm stressed that producing a limited number of immersion DUV tools does not equate to delivering equipment ready for high-volume manufacturing.

Initial reported plans call for roughly five machines this year and about 20 in 2027, far below ASML’s output of 131 immersion DUV systems last year, it said.

P Equity Research also dismissed the selloff. “China has this stereotype of flooding markets with supply but this isn't something where capacity comes on quickly. People say the same with memory but the amount of capacity they are adding will be negligible compared to demand,” the firm said in a post on X.  

Early-Stage Chinese Effort

According to the report by The Information, a Shanghai-based company aims to supply the tools to domestic chipmakers as China seeks greater self-reliance in semiconductors. The program remains early-stage, the report said, while adding that Chinese producers will likely require months or longer to validate the machines’ accuracy, reliability, and compatibility before any production-line use. The systems currently lag ASML’s offerings in performance and build quality, though expanded local output could gradually pressure the Dutch firm’s position in China over time, the report added.

Immersion DUV lithography systems are among the semiconductor industry's most important manufacturing tools, used to print circuit patterns onto silicon wafers.

While ASML's more advanced extreme ultraviolet (EUV) machines are required for the most cutting-edge chips, DUV systems remain essential for producing a wide range of semiconductors, including mature chips used in automobiles, industrial equipment and AI infrastructure. ASML cannot export its EUV machine or more advanced DUV machines to China under U.S.-led export controls.

How Did ASML Retail Traders React?

On Stocktwits, retail sentiment around ASML stock rose from ‘bearish’ to ‘neutral’ over the past 24 hours, while message volume stayed at ‘low’ levels.

A Stocktwits user voiced hopes for a recovery in the stock next week and dismissed the selloff on Monday as a market overreaction.

Another user pinned the selloff on the stock pricing in high expectations. “Strong companies can still drop when valuations leave little room for disappointment,” they wrote. ASML is currently trading at a forward price-to-earnings ratio of 40.49, compared to Nvidia’s 23.58.

ASML stock has gained about 55% year to date.   

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