What Happened?

A number of stocks fell in the morning session after a cautious outlook from semiconductor equipment giant ASML sparked a broad sell-off across the sector, hitting chipmakers and equipment suppliers alike. 

The negative sentiment was triggered after the Dutch firm, whose complex machines are essential for producing advanced chips, warned it could no longer guarantee growth in 2026. ASML's management cited "increasing uncertainty driven by macro-economic and geopolitical developments," including the potential for new U.S. tariffs. As an industry bellwether, a company whose performance is seen as an indicator of the entire sector's health, ASML's comments are a key signal of future capital spending. The warning sent a chill through the market, as concerns grow that trade tensions could disrupt the highly globalized semiconductor supply chain and slow down investment from chip manufacturers.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Analog Semiconductors company Texas Instruments (NASDAQ: TXN) fell 3%. Is now the time to buy Texas Instruments? Access our full analysis report here, it’s free.
• Semiconductor Manufacturing company Semtech (NASDAQ: SMTC) fell 3.2%. Is now the time to buy Semtech? Access our full analysis report here, it’s free.
• Processors and Graphics Chips company Allegro MicroSystems (NASDAQ: ALGM) fell 3.3%. Is now the time to buy Allegro MicroSystems? Access our full analysis report here, it’s free.

Zooming In On Allegro MicroSystems (ALGM)

Allegro MicroSystems’s shares are extremely volatile and have had 40 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock gained 22.3% after Bloomberg reported the company was fielding takeover interests from peer, ON Semiconductor. The sources added that there could be other bidders in the mix too. Most acquisitions close at a premium, raising the possibility that existing investors could exit their positions at a higher price if Allegro strikes a deal with a buyer.

Allegro MicroSystems is up 56.2% since the beginning of the year, and at $35.63 per share, it is trading close to its 52-week high of $37.51 from July 2025. Investors who bought $1,000 worth of Allegro MicroSystems’s shares at the IPO in October 2020 would now be looking at an investment worth $2,013.

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