Shares of ASML, a prominent semiconductor equipment manufacturer, dropped by 16% on Tuesday after the company disclosed its financial results a day ahead of schedule and issued sales forecasts that fell short of expectations. This announcement also negatively impacted other chip stocks, causing decreases in the stock prices of companies such as Nvidia, Advanced Micro Devices, and Broadcom.
Based in Veldhoven, Netherlands, ASML projected its net sales for 2025 to range between 30 billion euros and 35 billion euros ($32.7 billion to $38.1 billion), marking the lower end of its previously anticipated range. The company reported net bookings for the September quarter at 2.6 billion euros ($2.83 billion), which is significantly below the LSEG consensus estimate of 5.6 billion euros. However, net sales exceeded expectations, reaching 7.5 billion euros.
In the earnings release, CEO Christophe Fouquet commented on the situation, stating, “While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected.”
ASML attributed the premature publication of its results to a technical error that led to the inadvertent posting of the report on a section of its website. Prior to the earnings announcement, Wall Street analysts had adopted a more cautious stance towards the company, recognizing its pivotal role as a supplier to the broader semiconductor industry.
ASML is currently confronting a challenging business environment in China, affected by export restrictions imposed by the U.S. and Dutch governments. The U.S. government recently introduced new export controls on key technologies to China, including advanced chipmaking tools. Additionally, the Dutch government plans to regulate exports of ASML’s equipment to China. ASML’s extreme ultraviolet lithography machines are utilized by major chipmakers globally, including Nvidia and Taiwan Semiconductor Manufacturing, for advanced chip production.
ASML CFO Roger Dassen expressed expectations that the company’s business dealings in China will normalize in the order book and revenue figures, projecting that China would contribute to around 20% of the company’s total revenue next year, aligning with its representation in the backlog. In the earnings presentation for the second quarter, ASML indicated that 49% of its sales originated from China.
Following ASML’s results on Tuesday, analysts from Bernstein indicated that the weaker-than-anticipated order book and disappointing 2025 outlook might overshadow the favorable third-quarter performance. They suggested that the revised guidance reflects challenges from a delayed cyclical recovery and specific customer issues impacting the 2025 outlook. Cantor analysts labeled ASML’s outlook as “clearly disappointing” and predicted it would affect semiconductor stocks; however, they emphasized that this does not imply any change in the positive growth trajectory of AI-related business.
