TLDR:
- ASML’s Q3 earnings report was accidentally published early
- Q3 net bookings of €2.6 billion significantly missed estimates
- 2025 revenue forecast lowered to €30-35 billion, below previous guidance
- Stock plunged over 16% following the news
- Other semiconductor stocks like Nvidia and AMD also declined
ASML, Europe’s largest tech company and a key supplier of chip-making equipment, surprised investors on Tuesday with weaker-than-expected bookings and a reduced sales forecast for 2025.
The news, which was accidentally published a day early, sent the company’s shares plummeting in their biggest one-day drop since 1998.
The Dutch company reported third-quarter earnings that showed solid growth, with revenue of €7.47 billion ($8.14 billion), up 11.2% from the same period last year. Earnings per share rose to €5.28, beating analyst estimates. However, the positive results were overshadowed by disappointing net bookings of €2.6 billion, far below expectations ranging from €4 billion to €6 billion.
ASML’s CEO, Christophe Fouquet, cited a more gradual market recovery than anticipated as the reason for the company’s revised outlook.
While demand for AI-related chips remains strong, other segments of the semiconductor market are taking longer to bounce back. This has led to increased caution among ASML’s customers, particularly in the logic and memory chip sectors.
The company now expects its 2025 total net sales to grow to between €30 billion and €35 billion, which represents the lower half of the range provided at its 2022 Investor Day. This downward revision disappointed investors who had been counting on a faster recovery in the semiconductor industry.
ASML’s customers, including major players like TSMC, Intel, Samsung, Micron, and SK Hynix, are adjusting their plans in response to market conditions. Logic chip makers are delaying orders, while memory chip producers are only adding limited new capacity. This cautious approach is reflected in ASML’s reduced forecast and weaker bookings.
The unexpected news had a ripple effect across the semiconductor industry.
Other major chip stocks, including Nvidia and AMD, also experienced declines following ASML’s announcement. This suggests that investors are reassessing their expectations for the sector’s near-term growth prospects.
Despite the current challenges, ASML maintains a strong position in the industry as the leading supplier of lithography equipment used in chip manufacturing. The company’s advanced technology, particularly in extreme ultraviolet (EUV) lithography, remains crucial for producing the most advanced semiconductors.
For the fourth quarter of 2024, ASML projects revenue between €8.8 billion and €9.2 billion, with a gross margin of 49% to 50%. The company also declared an interim dividend of €1.52 per share, payable on November 7, 2024.
While the reduced forecast for 2025 has undoubtedly shaken investor confidence, it’s important to note that ASML’s long-term prospects remain strong.
The ongoing digitalization of various industries and the increasing demand for advanced computing power, particularly in AI applications, are likely to drive growth in the semiconductor industry over the coming years.
However, the current market situation underscores the cyclical nature of the semiconductor industry and the impact of broader economic factors on chip demand.
As companies and consumers adjust their spending in response to economic uncertainties, chip makers and their suppliers like ASML must navigate these fluctuations.
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