(VOR News) – The shares of ASML experienced a 15.7% decline on Tuesday, the largest since the chipmaker went public in 2002, as a consequence of the publication of an early results report that disclosed a reduced sales estimate for 2025.
A Dutch manufacturer of semiconductor equipment, ASML, experienced a decline in its share price on Tuesday due to an error that caused the company’s earnings for the third quarter to be announced earlier than anticipated.
As of the close of trading in Amsterdam, ASML Holding shares had experienced a 15.7% decline, the most significant one-day decline since the company’s IPO in January 2002.
This decline coincided with the start of ASML’s trading.
In an early publication of the results report for the third quarter of ASML’s fiscal year, the company disclosed a decrease in its 2025 revenue estimate. Consequently, investors became apprehensive, which led to a more extensive sell-off in the semiconductor sector.
The recovery is anticipated to be delayed, and consumers are anticipated to exercise caution as part of the revised prediction for the year 2025.
The foremost European chipmaker organization has decreased its forecast for 2025 net sales to a range of thirty to thirty-five billion euros. The previous recommendation that was provided during the company’s 2022 Investor Day was between thirty and forty billion euros. This indicates a decrease from the original quantity due to its lower value.
Investors were alarmed by this more cautious approach, which was primarily precipitated by delays in the demand for extreme ultraviolet lithography (EUV). This led to market shockwaves.
The situation is the consequence of a combination of industry variables that have contributed to ASML’s reduced estimate of predicted net sales in 2025.
Despite the fact that artificial intelligence (AI) is still undergoing substantial advancements and has the potential for further development, other industry sectors are rebounding at a sluggish pace, according to Christophe Fouquet, President and Chief Executive Officer of ASML.
The individual who was speaking emphasized that the recovery of logic chips has been delayed, and the demand for EUV equipment has been delayed as a result of restricted capacity expansions in the manufacturing of memory chips.
The development of EUV equipment is a substantial area of expansion for the company.
Electrification, artificial intelligence, and energy transition are among the long-term development drivers that ASML is enthusiastic about. Fouquet underscored the ongoing strength of these trends. ASML is optimistic about the influence of these growth drivers.
The most optimistic projections for the year 2024’s sales and profits were found in the third quarter’s finest earnings.
Net sales of €7.5 billion and profits of €2.1 billion support ASML’s third quarter 2024 performance.
The gross margin for this period is 50.8%. In general, the results were consistent with projections, which indicated that analysts had expected the third quarter to generate 7.12 billion euros in revenue.
ASML anticipates that its gross margin will decrease by 49% to 50% in the fourth quarter of 2024, and its net sales will decrease by 8.8 billion to 9.2 billion euros. The company reiterated its intention to generate revenues of approximately 28 billion euros for the entire year of 2024 when questioned about its objectives.
The company also implemented modifications to the dividend and share buyback program that ASML has been implementing. It is anticipated that an interim dividend of €1.52 per common share will be distributed on November 7, 2024, in accordance with the firm’s announcement.
However, no shares were repurchased as part of the ongoing share buyback program that spans from 2022 to 2025 during the third quarter.
The value of semiconductor securities plummeted rapidly.
The stock prices of numerous chipmaker businesses experienced substantial declines on Tuesday. NVIDIA Corporation’s shares experienced a more than five percent decline during trading in New York, while Arm Holdings plc’s shares experienced a more than seven percent decline. The precipitous decline at ASML had an impact on a number of other semiconductor companies.
The tech-heavy Nasdaq 100 index experienced a decline of over one percent as a consequence of the sell-off, while the broader semiconductor sector, which is monitored by the iShares Semiconductor ETF, experienced a decline of over four percent.
SOURCE: EN
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