Technology giant ASML (ASML, Financial) unexpectedly released its third-quarter financial report, revealing an order value significantly below expectations, causing a major shakeup in the U.S. semiconductor sector. The report, originally scheduled for release on October 16, was prematurely posted online, quickly captured by third-party sites despite ASML's efforts to retract it. The third-quarter orders amounted to only €2.6 billion, about half of the expected €5.4 billion.
ASML also shared a disappointing outlook. CEO Christophe Fouquet projected net sales to grow between €30 billion and €35 billion by 2025, with gross margins between 51% and 53%. This was a narrower range compared to the previous guidance of €30 billion to €40 billion.
Despite exceeding expectations with third-quarter net sales of €7.467 billion and a net profit of €2.077 billion, ASML's stock plummeted 16% on the Amsterdam Stock Exchange, marking its largest drop since June 1998, leading to a temporary trading halt. The stock closed at $730.43 per share, with a market value of $291.9 billion.
The impact extended to U.S. chip stocks; NVIDIA fell 4.52% to $131.84, AMD dropped 5.22% to $156.64, Broadcom slipped 3.47% to $175.98, and TSMC decreased 2.62% to $187.17.
Fouquet commented that although AI continues to show strong growth potential, other sectors are taking longer to recover, with economic rebound slower than previously anticipated, a situation expected to persist until 2025, causing cautious customer behavior.
Chief Financial Officer Roger Dassen noted that ASML's Chinese business is anticipated to comprise about 20% of total revenue by 2025, down from 49% reported in the second quarter of this year. Analysts highlighted the weak semiconductor demand outside the AI computing field.
Bernstein analysts pointed out that the lower-than-expected order volume and disappointing 2025 outlook overshadow ASML's solid third-quarter performance, reflecting the challenges of delayed cyclical recovery and specific customer issues. Cantor analysts mentioned that ASML's pessimistic outlook will pressure semiconductor stocks, though it doesn't imply negative changes in AI development. Degroof Petercam bank analysts shared a similar view, suggesting that while ASML's performance will temporarily drag the chip industry, it doesn't indicate a future decline in equipment demand. Citibank analysts are seeking more details on ASML's recent demand changes.
