ASML Faces Turbulence After Premature Earnings Release
Dutch semiconductor equipment titan ASML experienced a significant decline in its stock value on Tuesday following the unintentional early release of its third-quarter earnings report. The shares of ASML Holding, listed in Amsterdam, plummeted by 15.7%, marking the most substantial single-day drop since the company went public in January 2002. This unforeseen decline raised alarms among investors and contributed to a broader downturn within the semiconductor sector.
Revised 2025 Sales Outlook: Caution from Customers and Slower Recovery
The leading European chipmaker made a downward adjustment to its 2025 net sales forecast, now projecting a range between €30 billion and €35 billion, down from the earlier estimate of €30 billion to €40 billion shared during its 2022 Investor Day. This cautious revision, largely attributed to delays in demand for EUV (extreme ultraviolet lithography) technology, unsettled investors and reverberated throughout the market.
ASML’s lowered guidance for 2025 is influenced by various market dynamics. Christophe Fouquet, ASML’s President and CEO, commented, “While there are still substantial developments and potential in AI, other segments of the market are taking longer to bounce back.” He emphasized that the sluggish recovery in the logic chip sector, coupled with limited capacity expansions in memory chip production, has resulted in postponed demand for EUV equipment—an essential growth area for ASML.
Despite these challenges, ASML maintains a positive outlook on long-term growth opportunities, with Fouquet highlighting the enduring strength in artificial intelligence, electrification, and energy transition trends.
Q3 Earnings Highlights: Strong Sales and Robust Margin Expectations for 2024
For the third quarter of 2024, ASML reported total net sales of €7.5 billion and net income of €2.1 billion, achieving a gross margin of 50.8%. These results aligned closely with analysts’ expectations, who had forecasted Q3 sales to be approximately €7.12 billion. Looking towards the final quarter of 2024, ASML anticipates net sales ranging from €8.8 billion to €9.2 billion, with a gross margin projected between 49% and 50%. The company reaffirmed its full-year sales target of around €28 billion for 2024.
In addition, ASML provided an update on its dividend and share buyback initiatives. The company announced an interim dividend of €1.52 per ordinary share, scheduled for payment on November 7, 2024. However, no shares were repurchased during the third quarter as part of the ongoing share buyback program, which is set to run from 2022 to 2025.
Impact on Semiconductor Stocks
The steep decline in ASML’s stock had a ripple effect across the semiconductor industry, with shares of Nvidia Corp. dropping more than 5% in New York trading, and Arm Holdings plc experiencing a decline of over 7%. The broader semiconductor sector, represented by the iShares Semiconductor ETF, fell by over 4%. Additionally, the tech-heavy Nasdaq 100 index saw a dip of more than 1% amid this market sell-off.
