Shares of ASML, the leading supplier of advanced lithography equipment for making semiconductors, tumbled on Tuesday after the company reported disappointing third-quarter bookings and lowered its 2025 guidance. Other chip stocks fell with ASML stock on the news.
On the stock market today, ASML stock plunged 16.3% to close at 730.43.
The Dutch semiconductor equipment maker reported a jump in third-quarter profit, but signaled major headwinds ahead.
"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," Chief Executive Christophe Fouquet said in a news release. "This is expected to continue in 2025, which is leading to customer cautiousness."
The Philadelphia semiconductor index, known as SOX, dropped 5.3% on Tuesday. The SOX includes the 30 largest semiconductor stocks traded in the U.S.
Other semiconductor equipment makers falling in sympathy included KLA, down 14.7%; Applied Materials, down 10.7%; and Lam Research, down 10.9%.
Among major semiconductor stocks, Nvidia fell 5%, AMD slid 5.2% and Broadcom retreated 3.5%. Chip designer Arm Holdings tanked 6.9%.
ASML was scheduled to report its third-quarter results early Wednesday but released them a day early instead.
Guidance Weighs On ASML Stock
"The big headline from ASML was disappointing bookings coming in well below expectations," Bernstein analyst Sara Russo said in a client note. "Combined with lowered 2025 guidance, these headlines are likely to overshadow decent Q3 results."
ASML reported bookings of 2.6 billion euros ($2.8 billion) vs. consensus expectations of 5.4 billion euros ($5.9 billion), she said.
The Veldhoven, Netherlands, company earned the equivalent of $5.80 a share on sales of $8.21 billion in the third quarter. Analysts polled by FactSet had expected earnings of $5.36 a share on sales of $7.87 billion. On a year-over-year basis, ASML earnings rose 14.4% while sales increased 16.8%.
ASML guided to fourth-quarter revenue of 8.8 billion to 9.2 billion euros. The midpoint translates to $9.8 billion, which matched views.
ASML also reduced its revenue outlook for 2025 to the lower half of its range of 30 billion to 40 billion euros. It had previously guided to the upper half of that range.
Russo rates ASML stock as outperform with a price target of 1,052.
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