ASML Holding N.V. (ASML) Slid 18.3% in Q3 on Investor Concerns

ASML Holding N.V. (ASML), a leading supplier to the semiconductor industry, experienced a significant stock price decline of 18.3% in the third quarter of 2024. This drop was primarily driven by investor concerns about the company's guidance for 2025, which fell short of previous expectations. ASML's revenue growth is projected to be in the lower half of the range provided at its 2022 Investor Day, with a gross margin below the previously expected range. This is mainly due to the delayed timing of EUV demand, which is expected to impact ASML's financial performance in 2025.
ASML's gross margins and net income have shown a consistent upward trend over the past few quarters. In Q2 2024, gross margins were 51.5%, increasing to 50.8% in Q3. Net income also grew from €1.578 billion in Q2 to €2.077 billion in Q3. This steady improvement indicates strong financial performance, despite market concerns.
Export controls, particularly those imposed by the U.S. and Dutch governments, have significantly impacted ASML's China sales. In Q3 2024, ASML's CFO, Roger Dassen, stated that China's representation in the company's order book and business had normalized to around 20% of total revenue, down from 49% in the June quarter. This decline is primarily due to export restrictions targeting critical technologies, including ASML's advanced chipmaking tools. Despite these challenges, ASML expects China sales to return to more historically normal levels in the future, indicating that the company remains optimistic about its long-term prospects in the Chinese market.
ASML's competitors, TSMC and Samsung, have had a significant impact on the company's market position. TSMC, the world's largest contract chipmaker, is slowing its adoption of new equipment due to weaker demand in consumer electronics, which has complicated ASML's financial outlook. Meanwhile, Samsung has delayed shipments of ASML's lithography equipment for its Texas fabrication plant, impacting ASML's revenue. Despite these challenges, ASML remains the sole provider of extreme ultraviolet (EUV) lithography machines, maintaining its critical role in the semiconductor industry.
In conclusion, ASML's stock price decline in Q3 was primarily driven by investor concerns about the company's guidance for 2025. Despite these concerns, ASML's financial performance has remained robust, with consistent improvements in gross margins and net income. The company continues to navigate geopolitical tensions and export restrictions, with a long-term optimistic outlook for its China sales. ASML's competitors, TSMC and Samsung, have influenced the company's market position, but ASML's role as the sole provider of EUV lithography machines ensures its continued significance in the semiconductor industry.