ASML Holdings (NASDAQ: ASML), the Dutch semiconductor equipment giant, experienced a dramatic stock price crash on Tuesday, falling by 16% in one of its steepest declines in 20 years.
This sharp drop, which erased over $55 billion from its market value, occurred after the company accidentally published its third-quarter financial results a day early.
The results revealed a disappointing outlook for 2025, with significantly lower-than-expected new orders, sending shockwaves across the semiconductor sector.
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ASML closed Tuesday at $730 after its 16% drop, driven by the early release of disappointing financial results and concerns about reduced exposure to the Chinese market.
These issues weighed heavily on investor sentiment and triggered a broader selloff in the semiconductor sector.
A disappointing earnings release
ASML reported net sales of €7.5 billion ($8.2 billion) for the third quarter, slightly ahead of analyst estimates. However, the main concern came from the company’s net bookings, which totaled just €2.6 billion ($2.83 billion), far below the expected €5.6 billion ($6 billion).
This shortfall in orders suggests a more sluggish recovery for the broader semiconductor market, which was amplified by the early publication of the results, a technical error that only added to investor unease.
CEO Christophe Fouquet addressed this cautious environment, stating that while artificial intelligence (AI) remains a bright spot, “other market segments are taking longer to recover,” signaling a more gradual industry-wide recovery than previously expected.
“While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover. It now appears the recovery is more gradual than previously expected”
– Christophe Fouquet
This weaker-than-anticipated recovery is reflected in ASML’s reduced sales forecast for 2025, which now stands between €30 billion and €35 billion, down from previous projections as high as €40 billion.
Ripple effect on the semiconductor sector
ASML’s stock drop triggered a broader selloff across the semiconductor sector, with major chip makers also seeing declines.
Nvidia (NASDAQ: NVDA), already under pressure due to concerns over a potential policy change, fell by 4.5%. Advanced Micro Devices (NASDAQ: AMD) dropped 5%, while Broadcom Inc. (NASDAQ: AVGO) declined 3.5% following ASML’s disappointing report.
The Philadelphia Semiconductor Index fell by 5.3% as investors reacted to the weaker-than-expected results from one of the sector’s key players.
Challenges in china add to the pressure
Compounding ASML’s troubles are increasing challenges in China, where the company has been affected by U.S. and Dutch export restrictions on advanced chipmaking tools.
China has historically been a significant revenue source for ASML, with sales to the country making up nearly 49% of its revenue in the previous quarter.
However, CFO Roger Dassen indicated that China’s contribution is expected to fall to around 20% of total revenue next year, as geopolitical tensions and restrictions weigh heavily on business prospects.
The company’s reduced exposure to the Chinese market is now a significant hurdle to its growth prospects, especially as other markets recover more slowly than expected.
Analyst reactions and market sentiment
The market’s reaction to ASML’s earnings report was swift and negative. However, some analysts maintain a more optimistic outlook on the company’s long-term potential.
Goldman Sachs, led by analyst Alexander Duval, still considers ASML a “Buy” opportunity despite the near-term challenges. Similarly, Sara Russo from Bernstein continues to hold a positive opinion on the stock, retaining her “Buy” rating.
While ASML is facing short-term headwinds, its critical role in the semiconductor industry positions it for long-term growth, particularly as demand for AI chips continues to rise.
Indeed, while ASML closed Tuesday with a drop, it remains a key player in the semiconductor sector. However, the sharp revision of its 2025 outlook has raised questions about the pace of recovery in the broader market.
Investors are bracing for continued volatility as the industry navigates delayed demand, geopolitical challenges, and shifting customer priorities.
