ASML Stock Drops 10% on Revised Guidance, Geopolitical Concerns

ASML Holding N.V. (ASML.US) experienced a significant decline of nearly 10% at the opening of trading on Wednesday, marking its most substantial drop since April. The company reported a second-quarter earnings per share of 5.90 euros, surpassing market expectations of 5.24 euros. Revenue for the quarter grew by 23.2% year-over-year to 7.69 billion euros, exceeding the market forecast of 7.55 billion euros.

Despite the strong second-quarter performance, ASML revised its guidance for the third quarter, projecting revenue between 7.4 billion and 7.9 billion euros, below the market expectation of 8.26 billion euros. Additionally, the company lowered its fiscal year 2025 revenue growth forecast to 15%, resulting in an estimated 32.5 billion euros, significantly below the market expectation of 37.39 billion euros.

The company's CEO, Christophe Fouquet, attributed the downward revision to increasing uncertainties stemming from macroeconomic and geopolitical developments. In the quarterly earnings statement, Fouquet noted that while the company is still preparing for growth by 2026, the current environment makes it difficult to confirm this outlook. This cautionary statement from the management team has raised concerns about the company's ability to achieve its long-term growth targets.

ASML's second-quarter order intake was 5.54 billion euros, a 41% increase from the previous quarter, exceeding market expectations. Despite this strong performance, the company maintained its full-year revenue growth target of approximately 15% and a gross margin of around 52%. However, the management team warned that the increasing uncertainties in the macroeconomic and geopolitical landscape could hinder the company's ability to achieve growth by 2026.

The company's decision to narrow its financial targets for the year and withdraw its financial outlook for 2026 comes amid growing uncertainty surrounding U.S. tariff policies. The CEO emphasized that while the company is still working towards achieving growth by 2026, the current environment makes it challenging to guarantee this outcome. This cautious stance from the management team has led to a significant drop in the company's stock price, reflecting investor concerns about the company's future prospects.