Why China is not the only issue the company is facing.
The semiconductor equipment giant's stock plunged following its latest quarterly report.
ASML, a market leader with a monopoly in the EUV lithography market, is trading 37% off its high, presenting a Strong Buy opportunity. Despite short-term concerns like chip market slowdowns and regulatory risks, ASML Holding's long-term outlook remains robust, with potential for 43.3% upside within nine quarters based on its valuation. The Company's limited competition grants it pricing power and high profitability, with impressive EBITDA and net income margins. It's also less cyclical than some popular chip stocks.
Samsung Electronics has postponed taking deliveries of ASML chipmaking equipment for its upcoming factory in Texas as it has yet to win any major customers for the project, three people familiar with the matter said.
Stocks remain firmly in a bull market, led by the scorching hot AI industry. Nevertheless, Stock Strategist Andrew Rocco explains that investors may want to take their foot off the gas into late October, as short-term volatility may loom.
The latest bump in the AI road was a downbeat earnings report from ASML that sent its shares tumbling. But ASML's biggest customer, Taiwanese chipmaker TSMC, posted blockbuster results Thursday.
The stock dropped 16% earlier this week, after the company lowered its 2025 outlook.
ASML stock plummeted 26% in two days due to earnings released early and disappointing guidance. The company faces normalization of China demand, export controls, and lower-than-expected recovery of non-AI-related equipment demand. Despite challenges, ASML is set for double-digit growth next year and now offers an even more attractive valuation.
The company reported an update to its expectations for 2025 that disappointed investors.
Competition in the artificial intelligence (AI) space continues to intensify.
ASML dropped 22% in two days due to a 53% sequential decline in bookings, resulting in weaker-than-expected revenue growth and gross margin outlook for FY2025, driven by weak EUV growth. This bookings decline was largely driven by lower demand from "certain customers," possibly in China, which is expected to account for 20% of total revenue exposure in FY2025. Management indicated a more "normalized percentage" for China's exposure moving forward, implying a lower revenue mix beyond FY2025.
The quarterly updates of ASML, a critical supplier to the semiconductor industry, are vital to understanding the state of that industry.