Investors and analysts are presently eyeing ASML, a leading manufacturer of semiconductor equipment, with increasing skepticism following the company’s recent announcement to lower its financial forecasts for 2025. This adjustment stems from declining demand in sectors outside artificial intelligence (AI) and unexpected delays in orders, prompting concerns about the company’s immediate sales outlook and its ability to sustain growth in the long run.
ASML, which stands as Europe’s most valuable tech entity, remains a critical supplier for chipmakers globally. Nevertheless, after this latest guidance revision, market sentiment soured, resulting in the steepest drop in ASML’s stock value in two decades. On Wednesday morning, shares plummeted an additional 4.9%, settling at 635.60 euros, a stark contrast to the company’s all-time high of over 1,000 euros ($1,088) reached just a few months ago.
During a time when demand surged post-pandemic, ASML revealed that some of its customers have opted to postpone investments in new manufacturing plants and upgrades. This is particularly evident among manufacturers of logic chips, which are integral to smartphones and other electronic devices. Even makers of memory chips are opting for fewer expansions, thereby extending the lifecycle of their existing equipment.
Nick Rossolillo, an investor from Concinnus Financial who has been holding ASML shares since 2022, indicated, “It’s crucial to temper expectations about any single company, especially one like ASML that relies heavily on the spending strategies of its manufacturing clients.”
While ASML refrained from specifying which clients were behind the guidance reduction, market observers quickly turned their attention to TSMC, a prominent player in the AI chip sector for Nvidia and a supplier of smartphone chips for Apple. Analyst Michael Roeg from Belgian investment bank Petercam Degroof suggested that strong sales at TSMC do not necessarily reflect the broader state of the semiconductor industry, citing that the company has kept its capital expenditures relatively low this year.
In August, Intel publicly announced a significant cut in its capital spending, amounting to $10 billion for 2025, while Samsung is reportedly facing difficulties at its Texas facility.
ASML garners approximately 25% of total chipmakers’ investments in equipment, though some analysts foresee that evolving chip manufacturing technologies could reduce that share in the future. Further complicating matters is speculation that delays from customers may serve as a strategy to renegotiate prices with ASML, which could ultimately pressure profit margins.
Despite these challenges, ASML is still considered a foundational investment by many. However, investment firm Aureus has lowered its stake recently due to valuation apprehensions and a noted decline in orders from Chinese chipmakers amid escalating U.S. export restrictions.
As the semiconductor landscape shifts, ASML’s strategic responses and adaptations will be crucial in navigating these turbulent waters. Investors and analysts alike will be keenly watching the reactions from ASML’s leadership during their upcoming analyst call, hoping for insights on how the company plans to address these market challenges.
In a rapidly evolving tech ecosystem, ASML’s ability to maintain its edge and respond to customer needs will play a pivotal role in shaping its future trajectory.