Tech stocks tumbled late Wednesday afternoon with the Technology Select Sector SPDR Fund (XLK) dropping 3.7% and the SPDR S&P Semiconductor ETF (XSD) down 4.5%.

The Philadelphia Semiconductor index slumped 4.6%.

In corporate news, Microsoft-backed (MSFT) OpenAI introduced "the smartest models we've released to date" with the o3 and o4-mini, which are "trained to think for longer before responding." Separately, OpenAI is in talks to buy Windsurf, an AI-assisted coding tool, for $3 billion, Bloomberg reported. Microsoft shares fell 4%.

Computer chip shares fell after Nvidia (NVDA) warned about charges of up to $5.5 billion due to new export restrictions to China, and Advanced Micro Devices (AMD) cited costs of up to $800 million. Nvidia shares slumped 7.6%, and AMD dropped 7.7%. Arm (ARM), Broadcom (AVGO), Marvell (MRVL) and Micron (MU) also fell.

ASML (ASML) shares fell 7% after fiscal Q1 net revenue and guidance for Q2 net sales missed expectations by analysts.

President Donald Trump's tariffs may cost US-based semiconductor equipment suppliers more than $1 billion a year, Reuters reported. Applied Materials (AMAT), Lam Research (LRCX) and KLA (KLAC) both may face $350 million in annual financial losses, the report said.