Global chip stocks just got hammered. Nvidia (NASDAQ:NVDA) warned it's bracing for a $5.5 billion impact after the U.S. government banned exports of its H20 chip to Chinaits last viable AI product allowed in that market. That alone sent the stock down as much as 6.5% at 8.23am in premarket trading. Then came a gut punch from ASML (NASDAQ:ASML), the Dutch chip equipment giant, whose orders came in below expectations, sparking a 3.9% at the same time. Together, the two companies lost $155 billion in market capdragging the entire semiconductor sector deeper into its $2 trillion drawdown over the past three months.

• Warning! GuruFocus has detected 3 Warning Signs with NVDA.

The impact was immediate and global. Asia companies including Korea's SK Hynix (HXSCL), Taiwan's TSMC (NYSE:TSM), and Japan's Advantest all experienced share price decline. Even U.S.-listed Chinese tech names like Alibaba (NYSE:BABA) and Baidu (NASDAQ:BIDU) saw premarket pressure. This isn't just about tariffs or one-off policy noiseinvestors are now questioning whether the AI chip buying frenzy from the likes of Microsoft, Meta, and Google can continue at this pace into 2025. ASML, while optimistic long term, offered no visibility on how recent trade actions will affect its outlook. The bigger concern? That the AI tailwind may be losing steam just as policy headwinds accelerate.

Zooming out, this is a reminder that semiconductors remain ground zero for the U.S.-China tech standoff. The new restrictions on Nvidia's H20designed to comply with earlier export rulesare seen as a permanent shift in U.S. policy, not a one-off event. As a result, companies exposed to China's demand are getting repriced fast. Ironically, some Chinese chipmakers gained on hopes of accelerating domestic innovation, but the broader message for investors is clear: AI hype is hitting geopolitical friction, and the fallout is just getting started.