ASML’s Surprise Earnings Report Sends Shockwaves Through the Semiconductor Sector
Shares of ASML Holding N.V. (ASML) plummeted over 16% Tuesday morning following the accidental early release of its third-quarter earnings report. This unexpected disclosure, revealing a lowered 2025 sales outlook, triggered a significant sell-off not only in ASML’s stock but across the entire semiconductor sector, highlighting concerns about the industry’s near-term growth trajectory despite the continued strength driven by artificial intelligence (AI) investments. The downward revision in ASML’s forecast underscores a more cautious outlook than previously anticipated, raising questions about the broader health of the semiconductor market.
Key Takeaways: ASML’s Surprise Earnings and Market Reaction
- ASML’s stock plunged over 16% after an accidental early release of its Q3 earnings report.
- The company lowered its 2025 sales guidance from €30-€40 billion to €30-€35 billion, citing slower-than-expected recovery in some market segments.
- Despite strong Q3 results exceeding expectations (net sales of €7.5 billion and net income of €2.1 billion), the future outlook dampened investor sentiment.
- The negative news spread rapidly across the semiconductor sector, impacting major players and leading to significant drops in related ETFs.
- This event highlights the importance of accurate and timely financial disclosures and the market sensitivity to changes in future growth projections, even amidst strong current performance.
ASML Lowers 2025 Sales Forecast: A More Gradual Recovery
ASML’s revised 2025 net sales guidance, now projecting between €30 billion and €35 billion (approximately $32.7 billion to $38.2 billion), represents a significant reduction from its previous forecast of €30 billion to €40 billion. This downward revision is attributed to a slower-than-anticipated recovery in various market segments, even while the company acknowledges “strong developments and upside potential in AI“.
CEO Christophe Fouquet’s Remarks
ASML president and CEO, Christophe Fouquet, attributed the lowered forecast to a more gradual recovery than initially expected: “While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness.“
This statement emphasizes that while the AI sector remains a significant driver of growth, the broader market recovery is proving more protracted than ASML had previously predicted, leading to greater uncertainty and a more conservative sales projection.
ASML’s Q3 2024 Results: Strong Performance, Contrasting Outlook
Despite the lowered 2025 outlook, ASML’s third-quarter 2024 results were impressive, exceeding analyst expectations. The company reported total net sales of €7.5 billion, exceeding the consensus estimate of €7.12 billion. Net income reached €2.1 billion, with a healthy gross margin of 50.8%. Importantly, net bookings totaled €2.6 billion, with a considerable €1.4 billion allocated to Extreme Ultraviolet (EUV) systems, signaling continued strong demand for cutting-edge chip manufacturing equipment.
Q4 2024 Guidance and Full-Year Outlook
Looking ahead to the fourth quarter, ASML projects total net sales between €8.8 billion and €9.2 billion, maintaining a positive outlook for the remainder of the year. The company reaffirmed its full-year 2024 sales guidance of approximately €28 billion, indicating confidence in its current performance despite the reduced 2025 forecast. This reinforces the contrast between the strong current performance and the more cautious outlook for next year.
Sector-Wide Impact: A Ripple Effect Across Semiconductor Stocks
The negative reaction to ASML’s earnings news wasn’t confined to ASML itself; it triggered a broad sell-off impacting the entire semiconductor industry. The iShares Semiconductor ETF (SOXX) dropped by 3.7%, marking its worst day in over a month. Similarly, the VanEck Semiconductor ETF (SMH) experienced a decline of over 4%. This demonstrates the interconnectedness of the sector and the substantial influence a major player like ASML holds.
Worst-Performing Semiconductor Stocks
The impact was widespread, with many semiconductor companies experiencing significant declines. Among the hardest hit were: ASML (-16.55%), KLA Corporation (-9.88%), Applied Materials (-8.68%), Lam Research (-7.54%), Onto Innovation (-7.15%), Arm Holdings (-6.44%), and Nvidia (-5.52%). This indicates that the market’s concerns extend beyond ASML’s specific situation, reflecting a broader apprehension about the industry’s future growth.
The significant drop in ASML’s stock price and the wider ripple effect across the semiconductor sector underscore the market’s sensitivity to shifts in growth projections, even within a context of strong current financial performance. While ASML’s Q3 results exceeded expectations, the revision of its 2025 forecast has injected uncertainty into the market, prompting a substantial reassessment of the sector’s prospects.