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ASML Slips to 7th in WSB as Stock Faces Turbulence Amid China Concerns

AInvestFriday, Oct 18, 2024 7:02 am ET
1min read

ASML ranks 7th in the latest WSB ranking, dropping three places from the previous day. The Dutch photolithography giant saw its shares climb 2.50% as the day's lowest price hit a low not seen since November 2023.

Recent revelations about ASML indicate a tepid performance. The third-quarter orders fell significantly short of expectations, totaling only €2.6 billion. ASML has also adjusted its forecast for 2025 net sales down to between €30 billion and €35 billion, falling below the midrange of previous predictions.

This triggered a substantial plunge in ASML's stock, with reports suggesting a significant drop exceeding 15%. The market turmoil was attributed to speculation about ASML's dependency on China, though this view is not wholly accurate.

ASML's sales in China have tapered to historical averages. While the net sales exceeded forecasts at €7.5 billion, new orders dwindled to €2.6 billion, starkly less than the anticipated €5.6 billion. CFO Roger Dassen noted that sales to China are predicted to decline next year, partially due to U.S. export restrictions.

The significance of China to ASML is clear, yet pressures from U.S. policies have spurred Chinese buyers to stockpile ASML's DUV machines. Consequently, a return to past Chinese sales levels is expected.

Externally, ASML is experiencing demand contraction beyond China. With Intel and Samsung easing their capital expenditures, due to strategic and external pressures, the overall demand for ASML's equipment has waned, posing a challenge amid tightening U.S. export controls.

CEO Christophe Fouquet, who took the helm in April, faces turbulent times with ASML's market influences considered crucial across the semiconductor sector. While AI and related technological demands hold potential, the pathway to recovery remains cautious and measured, with dedication to navigating geopolitical landscapes paramount to ASML's strategic approach.

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.