ASML Stock Experiences a Second Day of Decline

Shares of ASML (ASML -6.39%) continued to slide today, marking a second consecutive day of losses. Following a surprising drop in stock price yesterday, investor sentiment did not improve after the company's earnings call this morning, which provided further insights into their less-than-optimistic guidance for 2025.

By 12:23 p.m. ET on Wednesday, the stock was down approximately 5.6% as negative reactions unfolded from the earlier announcements.

Demand for ASML's Products Slows Down

The latest earnings report did not reveal any significant new information, but it emphasized the difficulties the company is currently facing, particularly regarding slower-than-expected recovery in demand. ASML management confirmed that sales originating from China, which accounted for 47% of its revenue this past quarter, are projected to revert to more traditional levels of around 20% by 2025. This indicates a noticeable drop in demand from that region. Additionally, U.S. regulatory pressures have resulted in a prohibition on exporting the company's most advanced technologies to China.

In the preceding day’s announcements, ASML shared its expectation for 2025 revenues to be between 30 billion to 35 billion euros (roughly $32.7 billion to $38.1 billion), a reduction from its previous forecast of 30 billion to 40 billion euros set in 2022. While Wall Street has raised concerns over weaker demand from key customers like Intel and Samsung, ASML did not provide detailed information on which clients might be reducing their orders. The company anticipates that a portion of this demand will shift further into 2026.

Future Prospects for ASML

Despite these challenges, ASML stated that it still sees significant opportunities ahead, particularly in the artificial intelligence (AI) sector. This current setback appears to be more of a temporary delay, rather than an indication of a deeper structural issue within the company or the broader industry.

Although analysts are expected to revise their revenue estimates downwards following this news, the recent two-day stock sell-off may have left ASML shares reasonably priced. Given the company’s robust position in lithography equipment and the belief that this slowdown is transitory, ASML may present a compelling long-term investment option.

The author does not hold any positions in the stocks mentioned. The opinions expressed herein are solely those of the author.

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