Stock Performance: ASML Holding (AS) experienced a sharp decline in its share price, plummeting more than 16% on Tuesday following a significant downward revision of its 2025 sales outlook. The stock continued to fall by an additional 5% in Wednesday’s premarket session. This decline reflects investor disappointment after the company’s third-quarter earnings and revenue results fell short of expectations.
Q3 Financial Performance:
Adjusted Earnings: ASML reported Q3 adjusted earnings of €5.28 per share, missing the consensus estimate of €5.40.
Revenue: The company generated revenue of €7.47 billion, which, while representing a 19.6% year-over-year increase, fell short of the €7.9 billion expected by analysts.
Net Bookings: ASML’s net bookings for the quarter were particularly weak at €2.6 billion, significantly missing the forecasted €5.39 billion.
Q4 and 2024 Outlook:
For the fourth quarter, ASML anticipates revenue between €8.8 billion and €9.2 billion, with a gross margin in the range of 49% to 50%.
The company’s full-year 2024 revenue is expected to reach approximately €28 billion, aligning with previous guidance but still leaving concerns about future growth.
2025 Sales Forecast Cut:
ASML lowered its 2025 revenue projection to a range of €30 billion to €35 billion, down from the previous forecast of €35 billion to €40 billion. The gross margin forecast was also cut to 51% to 53%, below prior expectations.
The revision comes as a result of several industry-wide challenges, including Intel’s recent capital expenditure cuts, Samsung’s difficulties in its foundry and high-bandwidth memory (HBM) manufacturing, and overall weak demand in the non-AI semiconductor market.
Analyst Reactions:
Citi analysts noted that while a weaker 2025 outlook was expected due to the industry's struggles, the magnitude of the correction was a "negative surprise."
JPMorgan analysts emphasized that ASML’s AI-related business remains a bright spot, but rebounds in other markets have been slower than expected, particularly in the Logic segment, where delays in customer transitions to new technology nodes have affected demand for ASML’s EUV systems. Memory capacity expansions are also expected to be limited, with a focus on AI-related technology transitions.
CEO's Statement: ASML CEO Christophe Fouquet acknowledged the challenges, stating that "while there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover."
Broader Market Impact:
Following ASML’s release, shares of major semiconductor companies, including Nvidia (NASDAQ) and AMD (NASDAQ), also saw declines, highlighting the broader industry challenges.
Dividend Announcement:
Despite the disappointing results, ASML declared an interim dividend of €1.52 per share, which will be payable on November 7, 2024, providing some relief to shareholders amid the recent stock performance downturn.
ASML’s revised outlook and weak quarterly performance underscore the ongoing challenges in the semiconductor industry, despite pockets of growth in AI-related technology. The stock's sharp decline reflects investor concerns over the company.
Q3 Financial Performance:
Adjusted Earnings: ASML reported Q3 adjusted earnings of €5.28 per share, missing the consensus estimate of €5.40.
Revenue: The company generated revenue of €7.47 billion, which, while representing a 19.6% year-over-year increase, fell short of the €7.9 billion expected by analysts.
Net Bookings: ASML’s net bookings for the quarter were particularly weak at €2.6 billion, significantly missing the forecasted €5.39 billion.
Q4 and 2024 Outlook:
For the fourth quarter, ASML anticipates revenue between €8.8 billion and €9.2 billion, with a gross margin in the range of 49% to 50%.
The company’s full-year 2024 revenue is expected to reach approximately €28 billion, aligning with previous guidance but still leaving concerns about future growth.
2025 Sales Forecast Cut:
ASML lowered its 2025 revenue projection to a range of €30 billion to €35 billion, down from the previous forecast of €35 billion to €40 billion. The gross margin forecast was also cut to 51% to 53%, below prior expectations.
The revision comes as a result of several industry-wide challenges, including Intel’s recent capital expenditure cuts, Samsung’s difficulties in its foundry and high-bandwidth memory (HBM) manufacturing, and overall weak demand in the non-AI semiconductor market.
Analyst Reactions:
Citi analysts noted that while a weaker 2025 outlook was expected due to the industry's struggles, the magnitude of the correction was a "negative surprise."
JPMorgan analysts emphasized that ASML’s AI-related business remains a bright spot, but rebounds in other markets have been slower than expected, particularly in the Logic segment, where delays in customer transitions to new technology nodes have affected demand for ASML’s EUV systems. Memory capacity expansions are also expected to be limited, with a focus on AI-related technology transitions.
CEO's Statement: ASML CEO Christophe Fouquet acknowledged the challenges, stating that "while there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover."
Broader Market Impact:
Following ASML’s release, shares of major semiconductor companies, including Nvidia (NASDAQ) and AMD (NASDAQ), also saw declines, highlighting the broader industry challenges.
Dividend Announcement:
Despite the disappointing results, ASML declared an interim dividend of €1.52 per share, which will be payable on November 7, 2024, providing some relief to shareholders amid the recent stock performance downturn.
ASML’s revised outlook and weak quarterly performance underscore the ongoing challenges in the semiconductor industry, despite pockets of growth in AI-related technology. The stock's sharp decline reflects investor concerns over the company.