Shares of ASML, a prominent supplier of advanced lithography equipment for semiconductor manufacturing, experienced a significant drop on Tuesday following the company’s revelation of underwhelming third-quarter bookings and a reduction in its 2025 revenue forecast. This decline in ASML’s stock had a ripple effect on other semiconductor stocks.
On Tuesday, ASML’s stock plummeted by 16.3%, closing at 730.43.
Despite reporting an increase in third-quarter profits, ASML indicated that substantial challenges lie ahead. CEO Christophe Fouquet stated, “While we continue to see strong advancements and potential in AI, recovery in other market sectors is taking longer than anticipated. The recovery now seems to be progressing more slowly than we had previously expected.” He added that this trend is expected to persist into 2025, leading to increased caution among customers.
The Philadelphia semiconductor index, which tracks the 30 largest semiconductor stocks traded in the U.S., fell by 5.3% on Tuesday. Other companies in the semiconductor equipment sector also declined, including KLA, which dropped 14.7%; Applied Materials, down 10.7%; and Lam Research, which fell 10.9%.
In the realm of major semiconductor stocks, Nvidia saw a 5% decline, AMD dropped 5.2%, and Broadcom retreated 3.5%. Arm Holdings, a chip designer, faced a notable downturn of 6.9%.
Although ASML was initially set to report its third-quarter results on Wednesday, the company opted to release them a day earlier.
Concerns Over Guidance Impact ASML Shares
Bernstein analyst Sara Russo noted that the most significant takeaway from ASML’s report was the disappointing bookings, which fell considerably short of expectations. She commented, “Combined with the reduced guidance for 2025, these factors are likely to overshadow otherwise positive third-quarter results.”
ASML announced bookings of 2.6 billion euros ($2.8 billion), compared to consensus expectations of 5.4 billion euros ($5.9 billion).
The company, based in Veldhoven, Netherlands, reported earnings of $5.80 per share on sales of $8.21 billion in the third quarter. Analysts had anticipated earnings of $5.36 per share with sales of $7.87 billion. Year-over-year, ASML’s earnings increased by 14.4%, while sales rose by 16.8%.
For the fourth quarter, ASML projected revenue between 8.8 billion and 9.2 billion euros, with the midpoint aligning with market expectations.
ASML also adjusted its revenue outlook for 2025, now anticipating figures in the lower half of its previous guidance range of 30 billion to 40 billion euros, having initially forecasted the upper half of this range.
Russo maintains an outperform rating for ASML’s stock, with a price target set at 1,052.