Why ASML Stock Was Sliding Again Today

Shares of ASML (NASDAQ: ASML) were falling for the second day in a row today. After the chip equipment maker accidentally reported results yesterday, investors seemed to give a thumbs-down to its earnings call this morning that added some color to its downbeat guidance for 2025.

The chip stock was down 5.6% on the news as of 12:23 p.m. ET on Wednesday.

ASML sees slowing demand

There weren't any groundbreaking revelations in today's earnings report, but it underscored the challenges the company is facing as it sees a slower demand recovery than expected.

Management said that sales from China, which made up 47% of its revenue in the quarter, would return to normal historical levels closer to around 20% in 2025, showing a slowdown in demand from that country. Pressure from the U.S. has also led to a ban on exporting its most advanced equipment to China.

Yesterday, the company said that it expected 2025 revenue of 30 billion to 35 billion euros ($32.7 billion to $38.1 billion), down from a forecast in 2022 of 30 billion to 40 billion euros. Wall Street seemed to focus on weakness at customers like Intel and Samsung, though ASML didn't get into specifics on which companies were scaling back orders. It expects some of that demand to be pushed out into 2026.

Can ASML bounce back?

In its comments yesterday, ASML said it still saw a lot of potential from AI, and this setback seems to be more of a delay, rather than the result of a structural flaw with the business or the industry.

Analysts are likely to slash their estimates on the news, but the stock looks reasonably priced after the two-day sell-off. Considering its wide economic moat in lithography equipment and the temporary nature of the slowdown, ASML still looks like a smart long-term buy.

Should you invest $1,000 in ASML right now?

Before you buy stock in ASML, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $806,459!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 14, 2024