Shares of ASML (NASDAQ: ASML) fell today for the second day in a row. After the chip equipment maker accidentally reported results yesterday, investors seemed to take a positive view of the earnings figures this morning, which added some color to gloomy 2025 expectations.
Chip stock fell 5.6% on the news as of 12:23 a.m. ET on Wednesday.
ASML sees declining demand
There were no groundbreaking revelations in today’s earnings report, but it underlined the challenges the company faces as it sees a slower-than-expected recovery in demand.
Management said sales from China, which made up 47% of sales in the quarter, would return to normal historical levels in 2025, closer to around 20%, indicating a slowdown in demand from that country. US pressure has also led to a ban on the export of cutting-edge equipment to China.
Yesterday the company said it expects 2025 sales of 30 billion to 35 billion euros ($32.7 billion to $38.1 billion), compared with a 2022 forecast of 30 billion to 40 billion euros. Wall Street seemed to focus on weakness in clients like Intel And Samsungalthough ASML did not go into details about which companies are reducing their orders. It expects some of that demand to be pushed to 2026.
Can ASML bounce back?
In its comments yesterday, ASML said it still sees a lot of potential in AI, and this setback appears to be a delay rather than the result of a structural flaw in the company or industry.
Analysts will likely lower their estimates following the news, but the stock appears reasonably priced after the two-day sell-off. Given the large economic gap in lithography equipment and the temporary nature of the slowdown, ASML still seems like a smart purchase for the long term.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends Intel and recommends the following options: Short November 2024 $24 Calls on Intel. The Motley Fool has a disclosure policy.
Why ASML Stock Was Sliding Again Today was originally published by The Motley Fool
