Shares in microchip equipment giant ASML Holding NV (NASDAQ:ASML) plummeted 14% after it warned that it sees a slower recovery in the market for semiconductors.
Chip demand from artificial intelligence (AI) applications "continue to be strong developments and upside potential", said CEO Christophe Fouquet but "other market segments are taking longer to recover".
"It now appears the recovery is more gradual than previously expected," he said in an earning report statement delivered a day earlier than expected. "This is expected to continue in 2025, which is leading to customer cautiousness"
The Dutch group reported net sales of €7.5 billion for the third quarter, up from €6.2 billion in the second quarter. This, along with a gross margin of 50.8%, was higher than internal forecasts had indicated for the quarter.
Quarterly net bookings in Q3 were €2.6 billion of which €1.4 billion is extreme ultraviolet (EUV) lithography machines, which are an essential component of the AI chipmaking industry, with a price tag as high as $370 million each.
ASML said it expects fourth-quarter total net sales between €8.8 billion and €9.2 billion, and a gross margin between 49% and 50%, down from 50.8% in the third quarter.
That would make total net sales for 2024 of around €28 billion, which ASML expects to rise to between €30 billion and €35 billion for 2025, with a gross margin between 51% and 53%
The net sales for 2025 is in the lower half of the range that management provided at the 2022 investor day, with gross margin also below the range provided then, mainly related to the delayed timing of EUV demand, Fouquet added.
Shares in Nvidia fell 4.2% and other semiconductor shares also were dragged lower, with AMD Down 4.2%, Broadcom dropping 3.5% and TSMC and Intel both losing 2.2%.