Shares of ASML Holding, the leading provider of advanced lithography tools essential for semiconductor manufacturing, plummeted by 16.3% to close at 730.43 following a disappointing earnings report on Tuesday. The company announced weaker-than-expected third-quarter bookings and revised its 2025 revenue guidance downward, sending ripples through the tech stock market.
Despite reporting a robust profit increase in Q3, ASML’s leadership cautioned about significant challenges on the horizon. CEO Christophe Fouquet emphasized that while advancements and potential in artificial intelligence (AI) continue to be promising, recovery in other market segments is slower than anticipated. He noted that this trend is expected to persist into 2025, leading customers to adopt a more cautious approach.
The Philadelphia Semiconductor Index (SOX), which includes 30 of the largest semiconductor stocks traded in the U.S., felt the impact, dropping 5.3% on the same day. Other semiconductor equipment manufacturers also saw their stock prices decline sharply: KLA fell 14.7%, Applied Materials dropped 10.7%, and Lam Research declined 10.9%. Major chip manufacturers were not spared either; Nvidia slipped 5%, AMD saw a 5.2% fall, and Broadcom retreated by 3.5%. Chip designer Arm Holdings experienced a significant downturn as well, dropping 6.9%.
ASML’s earnings release was initially scheduled for early Wednesday; however, the company opted to announce its results a day earlier. The headlines from ASML’s report were mainly overshadowed by the underwhelming bookings, which totaled 2.6 billion euros ($2.8 billion), significantly below the market’s expectations of 5.4 billion euros ($5.9 billion).
On a positive note, ASML’s earnings per share reached $5.80, up from analysts’ expectations of $5.36, alongside reported sales of $8.21 billion, above the forecast of $7.87 billion. Year-over-year figures showed a 14.4% rise in earnings and a 16.8% increase in sales.
For the fourth quarter, ASML projected revenue between 8.8 billion and 9.2 billion euros, aligning with market expectations. However, the forecast for 2025 now sits in the lower range of its previous guidance, reduced to 30-40 billion euros.
Bernstein analyst Sara Russo commented that the disappointing bookings and lowered guidance would likely overshadow ASML’s otherwise solid quarterly results. She maintains an “outperform” rating on ASML’s stock, setting a price target of 1,052 euros.
In a broader context, ASML’s struggles highlight the challenges that the semiconductor sector faces amid shifting demand and economic uncertainty. The industry’s reliance on recovering markets, especially with the ongoing maturation of AI-related developments, adds complexity to future forecasts.
Market participants remain vigilant, with many eyes watching for potential recovery signs in the semiconductor space, alongside evolving trends that could impact tech stocks heavily reliant on ASML’s advanced technologies.