ASML's Q3 Earnings Miss Expectations, Sending Chip Stocks Plunging

ASML's Q3 Earnings Miss Expectations, Sending Chip Stocks PlungingDutch semiconductor equipment manufacturer ASML released its third-quarter earnings report on Tuesday, revealing disappointing sales expectations and causing its stock to plummet by 16%. The sharp decline in ASML's share price has sent shockwaves across the chip sector, with companies like Nvidia, AMD, and Broadcom also experiencing dips in their stock prices following the release

ASML's Q3 Earnings Miss Expectations, Sending Chip Stocks Plunging

Dutch semiconductor equipment manufacturer ASML released its third-quarter earnings report on Tuesday, revealing disappointing sales expectations and causing its stock to plummet by 16%. The sharp decline in ASML's share price has sent shockwaves across the chip sector, with companies like Nvidia, AMD, and Broadcom also experiencing dips in their stock prices following the release.

ASML projected net sales between 30 billion and 35 billion (around $32.7 billion to $38.1 billion) for 2025, falling within the lower end of previous estimates. Moreover, the company's net bookings for the third quarter reached 2.6 billion (approximately $2.83 billion), significantly lower than the 5.6 billion projected by the London Stock Exchange Group (LSEG). However, ASML's net sales surpassed expectations, reaching 7.5 billion.

Christophe Fouquet, ASML's CEO, addressed the current market landscape during the earnings call. He stated, "While the AI sector remains strong and still has upside potential, other segments will take longer to recover. Recovery is, at present, slower than previously anticipated."

ASML's early release of the earnings report was attributed to a technical error that led to the premature publication of the report on a specific section of its website. Notably, Wall Street analysts had already become more cautious about the company's outlook prior to ASML's earnings announcement.

As a key supplier to the entire semiconductor industry, ASML's performance holds significant weight. Concerns linger over the company's business prospects in the Chinese market due to export restrictions imposed by the US and the Netherlands. Last month, the US government introduced new export control measures targeting critical technologies in China, including advanced chipmaking equipment. Concurrently, the Dutch government announced its intention to intervene in the export process of ASML machines to China.

ASML's extreme ultraviolet lithography (EUV) machines are utilized by numerous leading chip manufacturers globally to produce advanced chips, including those from Nvidia and Taiwan Semiconductor Manufacturing Co. (TSMC). Roger Dassen, ASML's CFO, stated on Tuesday that he anticipates China's business to return to a more normalized proportion within the company's order intake and overall operations. He added, "We see China coming back to a more normalized level in our business. So we expect China to be around 20% of our total revenue next year, which is in line with its share of our backlog." However, it's worth noting that ASML's previous second-quarter earnings report mentioned that 49% of its sales originated from the Chinese market.

The bleak outlook "clearly disappointing" Following ASML's earnings release on Tuesday, Bernstein analysts issued a report highlighting that the lower-than-expected order numbers and subdued 2025 outlook "may overshadow a solid Q3 performance." The analysts further stated that ASML's lowered expectations indicate "a delay in cyclical recovery and customer-specific challenges are severely impacting 2025 forecasts." Meanwhile, analysts at Cantor expressed that ASMLs pessimistic outlook was clearly disappointing and expect it to put pressure on semiconductor stocks. However, they also emphasized that the companys updated outlook does not suggest any change in the AI growth trend.