Dutch lithography machine giant ASML was scheduled to release its Q3 earnings report on Wednesday, but due to a technical glitch, the report was posted early during U.S. market trading hours on Tuesday. What shocked the market even more was that ASML’s Q3 order intake was only €2.6 billion, barely half of the expected €5.4 billion. According to the report, ASML achieved net sales of €7.5 billion in Q3, with a gross margin of 50.8% and a net profit of €2.1 billion. The company expects Q4 sales between €8.8 billion and €9.2 billion, with a gross margin of 49%-50%, and forecasts total net sales for the 2024 fiscal year to reach approximately €28 billion.

Key Financial Data:

• Net Sales: Q3 net sales were €7.47 billion, a 20% quarter-over-quarter increase, surpassing analysts' expectations of €7.17 billion.
• Order Intake: Q3 orders amounted to €2.63 billion, down 53% quarter-over-quarter, while analysts had expected €5.39 billion.
• Gross Margin: Q3 gross margin was 50.8%, in line with analysts' expectations of 50.7%.
• Net Profit: €2.08 billion, a 32% quarter-over-quarter increase, exceeding the expected €1.91 billion.
• Cash and Other: €4.99 billion, down 0.7% quarter-over-quarter, compared to the expected €4.86 billion.

Despite ASML achieving better-than-expected Q3 net sales of €7.47 billion and net profit of €2.08 billion, the company's stock price plummeted 16% on Tuesday on the Amsterdam Stock Exchange, marking the largest drop since June 12, 1998. Trading was temporarily halted due to the steep decline.

Source: uSMART SG

Following ASML’s performance, several semiconductor stocks took a nosedive. Some insiders have suggested that ASML’s results could negatively impact the entire semiconductor sector, leading to an overall correction. ASML's stock closed at $730.43 per share, down 16.26%, with a total market capitalization of $291.9 billion. U.S. chip stocks also declined, with NVIDIA down 4.52% to $131.84 per share, AMD down 5.22% to $156.64, Broadcom down 3.47% to $175.98, and TSMC down 2.62% to $187.17 per share.

Source: uSMART SG

Source: uSMART SG

Source: uSMART SG

Source: uSMART SG

According to media reports on Tuesday, citing anonymous sources, the Biden administration is considering placing limits on export licenses for AI chips from U.S. companies like NVIDIA and AMD to certain countries. The focus of these controls is on Gulf region countries, which are increasingly demanding AI data centers and investing heavily in them.

ASML CFO Roger Dassen stated that the company expects its total net sales to grow to between €30 billion and €35 billion by 2025 (previously forecasted at €30 billion to €40 billion), with a gross margin between 51% and 53%, lower than the previously provided range. He also mentioned China several times, noting that 20% of ASML’s total revenue by 2025 is expected to come from China.

After the earnings report was released, ASML's ADRs in the U.S. stock market briefly fell over 17%, eventually closing down 16.26% at $730.43. The company's stock on the Amsterdam Stock Exchange also closed down 16%, marking its largest single-day drop since 1998, with trading temporarily halted during the session.

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Source: uSMART SG

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