ASML cuts sales forecasts in Q3 earnings published early

Computer chip equipment maker ASML forecast lower than expected 2025 sales and bookings on sustained weakness in parts of the semiconductor market, pushing its shares to their biggest one-day drop since 1998. The company said that despite a boom in AI-related chips, other parts of the semiconductor market are weaker for longer than expected, leading companies that make logic chips to delay orders and customers that make memory chips to only plan limited new capacity additions. ASML, Europe’s biggest tech firm, is the leading supplier of equipment used to manufacture chips, with customers including AI chipmaker TSMC of Taiwan, as well as logic chip makers Intel and Samsung, and memory chip specialists Micron and SK Hynix.

ASML published its quarterly earnings on its website a day earlier than expected. The company expects its 2025 total net sales to grow to a range between 30-35 billion euros, which is the lower half of the range. Chip market weakness is expected to continue in 2025, which is leading to customer cautiousness. Trading in the shares was halted several times in Amsterdam before they closed down 16% at 668.10 euros.

ASML’s earnings showed net profit of 2.1 billion euros on sales of 7.5 billion euros, slightly ahead of analyst estimates. However, the company’s bookings were 2.6 billion euros, well below forecasts that had ranged between 4 billion euros and 6 billion euros. The company’s share price slumped over the summer months following news Intel would cut its capital spending, and weakness in memory chip prices.

Still, ASML’s change in outlook was a negative surprise for analysts.

As recently as early September 2024, management had reiterated that the low-end of the 2025 range was still conservative. Analysts expected ASML’s warning to drag down the wider sector, but noted the company’s sales were still expected to rise in 2025 from 2024. There is still no downturn in demand for equipment despite sluggish end markets for chips.

Separately, ASML’s sales to China set a record at 2.79 billion euros, or 47% of its total, in the quarter. The company dominates the market for lithography equipment, which uses lasers to help create the circuitry of chips. While ASML cannot sell its most advanced product range in China due to American-led restrictions, Chinese chipmakers have been investing heavily in its equipment to make older generations of computer chips.

Shares of ASML, the leading supplier of advanced lithography equipment for making semiconductors, tumbled after the company reported disappointing third-quarter bookings and lowered its 2025 guidance. Other chip stocks fell with ASML stock on the news. ASML 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.

The Philadelphia semiconductor index, known as SOX, dropped 4.8%. The SOX includes the 30 largest semiconductor stocks traded in the United States. Other semiconductor equipment makers falling in sympathy included KLA, Applied Materials, and Lam Research. Among major semiconductor stocks, Nvidia fell 5.1%, AMD slid 5.2%, and Broadcom retreated 3.5%.

Chip designer Arm Holdings tanked 6.5%. The big headline from ASML was disappointing bookings coming in well below expectations, combined with lowered 2025 guidance, these headlines are likely to overshadow decent Q3 results. ASML reported bookings of 2.6 billion euros versus consensus expectations of 5.4 billion euros. Analysts 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.