ASML Stock Plunges Further On Lower 2025 Sales Outlook: Analysts Break Down Semiconductor Challenges

Benzinga · 10/16 14:52

Dutch semiconductor equipment maker ASML Holdings N.V. (NASDAQ:ASML) saw its shares plunge over 16% on Tuesday after its third-quarter earnings report was accidentally released a day ahead of schedule.

The company shocked the market by cutting its 2025 sales forecast, significantly lowering expectations for growth. This led to a rapid selloff as investors digested the implications of slower demand in key markets.

On Wednesday, shares of ASML extended losses, declining by 5% at 10 a.m. in New York.

Here's a breakdown of what Goldman Sachs and Bank of America analysts have to say about the report and ASML’s outlook.

Revised Sales Guidance Sends Shockwaves

ASML's third-quarter report revealed that its 2025 net sales are now expected to fall within the range of 30 billion euros to 35 billion euros ($32.7 billion to $38.2 billion).

This represents a cut from previous guidance of 30 billion euros to 40 billion euros. The reduction is largely due to weaker-than-expected demand for ASML’s Extreme Ultraviolet (EUV) lithography machines, crucial for advanced chip production.

Goldman Sachs: Delays In EUV Demand Impact 2025 Outlook

Gross margin estimates were also downgraded, now projected at 51% to 53%, compared to the prior 54% to 56%.

Goldman Sachs analyst Alexander Duval said that while ASML's third-quarter revenues were above the midpoint of its previous guidance, the 2025 sales revision highlights persistent challenges in the broader semiconductor market.

The company's lowered forecast reflects slower-than-anticipated recovery in several key segments, the analyst said.

ASML now expects to ship fewer than 50 low Numerical Aperture (NA) EUV systems in 2025, a number that reflects weaker-than-anticipated demand, he said.

“We expect investors to seek more color on 2026 dynamics given a degree of pushouts from 2025,” Duval said. The updated forecast implies a potential 10% reduction in revenue expectations and a 20% decline in earning before interest (EBIT) compared to prior consensus estimates for 2025, the analyst said.

Bank Of America: Multiple Headwinds Weigh On ASML

Bank of America's Vivek Arya named three key factors contributing to ASML's downward revision. First, global reshoring efforts and Intel's delayed foundry expansion plans have weighed heavily on demand, the analyst said.

"The recent capex cut and delay at Intel suggests that reshoring efforts may not be as successful as initially hoped,” he said.

Secondly, Arya said China likely pulled forward its equipment purchases over the last two years in anticipation of increasing geopolitical tensions and potential export restrictions. This has left a demand gap in the region, which could extend into 2025.

Finally, Arya highlighted a growing divergence between AI-related semiconductor demand in compute, networking and high-bandwidth memory (HBM) and non-AI-related markets, such as PCs, smartphones and automotive semiconductors, with the latter facing prolonged weakness.

Despite the revised 2025 sales guidance, Arya said Bank of America's preference for AI-related semiconductor companies remains strong.

“Our top picks continue to be NVIDIA Corp. (NVDA), Broadcom Inc. (NASDAQ:AVGO), and Marvell Technology Inc. (NASDAQ:MRVL), as their strong secular growth outlooks are generally unimpacted by today's print.”

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Photo courtesy of ASML.