ASML beat earnings and order forecasts. Why is the stock falling?

Holland-based ASML, the world's leading maker of chip-making equipment, published strong second-quarter results, beating consensus forecasts for both revenue and profit. The order book, a key indicator of demand, also came in above Wall Street expectations. That said, ASML disappointed with its revenue forecast for the current quarter and warned of possible stagnation going forward.

Last quarter, ASML posted a net profit of €2.29 billion against an expected €2.04 billion. Revenues amounted to €7.7 billion versus the €7.52 billion consensus forecast by LSEG. ASML's April-June order intake jumped 41% from January-March to €5.5 billion. Analysts surveyed by LSEG on average expected €4.2 billion, reports CNBC.

ASML CFO Roger Dassin explained the quarter's strong financial results to additional revenue from upgrades to existing chip-making equipment, and that the impact of duties was "less negative" than anticipated.

However, ASML gave a weak forecast for the current quarter (€7.4-7.9 billion against a consensus forecast of €8.3 billion) and warned: there may be no growth in 2026. "We continue to see increasing uncertainty driven by macroeconomic and geopolitical developments. Therefore, while we are still preparing for growth in 2026, we cannot confirm it at this stage," said ASML head Christophe Fouquet.

If Fouquet's fears are confirmed, 2026 could be the first year of revenue stagnation for ASML after more than a decade of uninterrupted growth, reports Reuters.

ASML is a supplier of lithography machines used to produce the most complex chips, including processors for Apple and Nvidia. The Dutch company's key customers include Intel and TSMC. After ASML reported weak demand for its equipment in April due to uncertainty surrounding duties, its shares plummeted and pulled the entire semiconductor sector.

ASML shares crashed by more than 7% on the OTC market on July 16. Nvidia slipped by 0.7%, TSMC by 0.5% in Robinhood's 24-hour trading.

Despite this, some investors remain optimistic. Aureus Chief Investment Officer Han Diperink, who owns ASML shares, stated to Reuters that he is not anxious about next year, noting that second-quarter results point to solid demand.

"The second quarter exceeded expectations across the board," echoed analyst Michael Rog of Degroof Petercam. He pointed to strong demand for ASML hardware from AI chip makers.

This article was AI-translated and verified by a human editor