Shares of ASML Holding NV took a sharp dive, marking the largest decline for the company in over two decades, after the semiconductor giant reported third-quarter bookings that fell significantly below analysts’ expectations. The notable drop sent ripples through the broader semiconductor market, impacting major players like Nvidia and prompting declines in chip-related stocks.
In a surprise move, ASML, a crucial provider of advanced chip-making machinery, announced that it secured approximately €2.6 billion (around $2.8 billion) in orders for the third quarter. This figure starkly contrasts with the average prediction of €5.39 billion from analysts, causing ASML shares to plummet by 16% in Amsterdam—the steepest decline since June 1998. The disappointing results not only rattled ASML investors but also triggered a sell-off across the technology sector, with Nvidia stocks dropping 4.5% and various equipment manufacturers experiencing significant losses.
Chief Executive Officer Christophe Fouquet commented on the company’s performance, attributing the downturn to a slower-than-expected recovery in the semiconductor industry. The revised guidance for 2025 reflects this uncertainty, with ASML projecting total net sales to fall between €30 billion and €35 billion, down from a previous high of €40 billion. For the next year, a projected gross margin of 51% to 53% is expected, diverging from previous estimates of 54% to 56%.
Compounding the issue, ASML’s financial results were unintentionally revealed a day early due to a technical error, further unsettling the market. The current semiconductor landscape is characterized by a mixed recovery; while demand for artificial intelligence accelerators remains robust, other sectors, such as automotive, face significant challenges, prompting customers to curtail orders amid excess inventory.
Analysts have echoes of skepticism regarding ASML’s outlook, suggesting that issues may persist longer than anticipated. Bernstein’s Sara Russo noted that market dynamics and customer concerns are likely to dampen ASML’s revenue trajectory for 2025.
Notably, this setback comes amid increased scrutiny and potential restrictions on ASML’s operations in China, which is its largest market, making up about 47% of its sales in the last quarter. With a nearly 20% rise in sales from China reported, the future appears uncertain as US-China tensions linger and affect semiconductor exports.
Furthermore, newly implemented European export control rules require ASML to apply for permits directly in the Netherlands for older equipment, complicating its operational landscape. The company’s latest performance underscores broader trends within the tech ecosystem, with significant ramifications for investors and stakeholders alike.
The chip manufacturer’s mismanagement of its communications and alignment with market trends casts a shadow over its immediate future, as observers remain cautious about the potential loss of revenue—up to 25% in sales from China as restrictions tighten.
As the semiconductor industry continues to grapple with a complex mix of demand fluctuations and geopolitical pressures, ASML stands at a critical juncture, needing strategic navigation to weather this storm and regain market confidence.