ASML (ASML, Financial) experienced a significant stock drop, falling over 16% to $727. The company's quarterly earnings fell short due to underwhelming order forecasts. Despite meeting expectations for sales and gross margin, the orders were only half of market expectations, prompting a reduction in next year's sales target.
In the third quarter, ASML's total net sales amounted to approximately €7.5 billion, a 20% increase from the previous quarter, beating analysts' predictions of €7.17 billion. The net profit was around €2.1 billion, a 32% increase compared to the forecasted €1.91 billion. The gross margin stood at 50.8%. However, orders for the quarter plummeted to €2.63 billion, a 53% decline, falling short of the expected €5.39 billion.
Looking forward, ASML predicts fourth-quarter 2024 net sales to be between €8.8 billion and €9.2 billion, with a gross margin of 49% to 50%, aligning with expectations. For the full year of 2024, the total net sales are projected to reach approximately €28 billion.
However, the company has revised its 2025 growth outlook downwards, particularly for EUV equipment demand. This change is attributed to client caution towards new technology nodes and a slow recovery in the logic chip market, delaying EUV demand timelines. ASML now anticipates 2025 total net sales to be between €30 billion and €35 billion, on the lower end of analyst estimates, which projected €35.94 billion. The expected gross margin is between 51% and 53%, down from the previous 54%-56% forecast.
ASML President and CEO Christophe Fouquet noted that while AI development offers potential growth, other markets are recovering slower than anticipated, causing client caution, especially in the logic chip sector. The competitive landscape in foundries has slowed the adoption of new nodes, impacting the demand for lithography equipment.
ASML announced an interim dividend of €1.52 per share, payable on November 7, 2024. The company did not repurchase any shares in the third quarter. Since its record high in July, ASML's stock has fallen 30% due to potential U.S. restrictions impacting foreign business and overall industry weakness.
Chip stocks mirrored ASML's decline, with NVIDIA (NVDA) dropping over 4%, AMD (AMD) dipping more than 4%, Micron Technology (MU) over 2.5%, and TSMC (TSM) declining over 2%.
