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ASML Rockets to 3rd on WSB While Stock Suffers Historic Plunge

AInvestWednesday, Oct 16, 2024 7:02 am ET
1min read

In the latest WSB rankings, ASML advanced to the 3rd position, climbing 94 spots from the previous day.

On Tuesday, ASML, a prominent Dutch lithography machine maker, released a quarterly report that stunned the market. The company's stock price plummeted by 16.26%, marking its largest single-day drop in 26 years. This sharp decline cast a shadow over the entire semiconductor sector, leading to a significant fall in chip stocks, with the Philadelphia Semiconductor Index dropping 5.28%.

The market's reaction followed ASML's announcement that its third-quarter sales and gross margins met expectations but were severely overshadowed by a 53% sequential decline in orders, falling far short of market projections. The company further lowered its sales forecast for the coming year, signals that suggested a potential downturn in global chip demand.

ASML's critical role as a supplier of lithography machines to major chipmakers like TSMC, Intel, and Samsung means its performance is often seen as an indicator of the semiconductor industry's health. The report's revelations sent shockwaves across the market, with major chip stocks such as NVIDIA, AMD, and Intel suffering notable losses.

ASML's performance not only destabilized tech stocks but also contributed to broader market declines. The Dow Jones Industrial Average fell by 0.75%, the S&P 500 by 0.76%, and the Nasdaq Composite by 1.01%. These declines reflect growing investor unease about the future trajectory of the tech and semiconductor sectors.

The report indicated that despite a surge in demand for AI-related chips, other areas of the semiconductor market remained weak, prompting logic chip makers to delay orders. The overall picture points to a potential decrease in investment plans by global chip manufacturers, preparing for what may be a prolonged demand slump.

Industry analysts have begun reassessing their outlooks, recognizing that the additional capacity built by chipmakers during the pandemic may lead to short-term overcapacity. As factories reach about 81% utilization, new equipment orders remain paused until further capacity expansion becomes urgent.

ASML's challenges highlight both immediate concerns and the necessity for strategic adjustments within the semiconductor industry. Observers will need to closely watch upcoming quarters to determine if these trends indicate a wider economic slowdown or are merely part of a cyclical adjustment.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.