Shanghai, October 16th (Xinhua) -- Dutch lithography giant ASML's third quarter financial report, originally scheduled to be released on Wednesday, October 16th local time, was unexpectedly released ahead of schedule due to technical issues. After the financial report was released around 10:30 am local time on Tuesday, October 15th, it caused a market shock. ASML's third quarter order amount was only 2.6 billion euros, less than half of the market's expected order amount of 5.4 billion euros, and the total net sales guidance for 2025 was lowered to between 30 billion and 35 billion euros (previously guidance was 30-40 billion euros).
Due to lower than expected order volume and performance guidance, ASML's stock price plummeted by 16%, the largest single day decline since June 12, 1998, and dragged down the entire semiconductor sector. The Philadelphia Semiconductor Index recorded its largest single day decline since early September, closing down 5.3%. Nvidia, which had just hit a new historical high yesterday, fell more than 5% at one point.
ASML's weak financial report may put pressure on the technology industry
Specifically, the financial report data shows that ASML achieved net sales of 7.47 billion euros in the third quarter, a 20% increase compared to the previous quarter and higher than analysts' expectations of 7.17 billion euros; The gross profit margin for the third quarter was 50.8%, slightly higher than analysts' expectations of 50.7%; The net profit was 2.08 billion euros, an increase of 32% compared to the previous period, higher than the market expectation of 1.91 billion euros.
ASML CEO Christophe Fouquet stated that although artificial intelligence still has development prospects and upward potential, other segmented markets will take longer to recover. Now it seems that the recovery is slower than previously expected.
Sara Russo, an analyst at investment firm Bernstein, said that ASML's lower than expected order volume and disappointing outlook for 2025 will overshadow the company's good performance in the third quarter. ASML's downward adjustment of its 2025 guidance means that cyclical recovery and specific customer challenges are seriously affecting the company's expectations for the future.
Kevin Gordon, Senior Investment Strategist at Jiaxin Wealth Management, believes that the market is currently mainly under pressure in the semiconductor sector, and ASML's performance has brought downward pressure to the entire technology industry.
Cantor's analysts believe that ASML's pessimistic outlook has disappointed the market and will put pressure on the semiconductor industry, but this does not mean that there will be negative changes in AI development in the future.
Since September, technology stocks have regained their upward momentum and once again led the US stock market. As of October 14th, the S&P information technology industry has risen by 5.9%, with Nvidia rising by 15.7% and once again breaking its all-time high closing level. But some analysts say that on the one hand, AMD is trying to grab a piece of the pie from Nvidia, intensifying competition for AI chip supply. On the other hand, the demand for computing power in models may also decrease, leading to a drop in the latest hourly rental prices.
Therefore, analysts believe that with AMD and Intel making efforts, as well as tech giants starting to develop their own chips, Nvidia's most profitable days may have passed, and there is significant uncertainty about whether Nvidia can continue to lead the US stock market upward.
Risks in the US stock market may intensify in the fourth quarter
UBS Group stated that, in the overall positive macro environment, although it continues to maintain expectations of further upward potential for risk assets, market volatility may increase again due to economic and market uncertainty. In addition to ASML's "explosive performance" causing concerns about insufficient demand, there are three other factors that affect the future trend of risk assets.
Firstly, the uncertainty of the Federal Reserve's policy path may lead to market volatility. Several Federal Reserve officials gave speeches this week, including Federal Reserve Governor Christopher Waller, San Francisco Fed President Mary Daly, Atlanta Fed President Raphael Bostic, and Federal Reserve Governor Adriana Kugler.
Federal Reserve Governor Christopher Waller hinted on Monday that the pace of further rate cuts should be "more cautious" compared to the 50 basis point cut in September. San Francisco Fed President Daley also stated that as inflation decreases and the labor market cools down, the Fed must remain vigilant.
Secondly, the tense situation in the Middle East may exacerbate the volatility of risk assets.
Finally, the uncertainty of the US presidential election. There are only three weeks left until election day, and as the competition intensifies, the campaign rhetoric may heat up, with the two candidates evenly matched. UBS expects that market uncertainty and volatility will increase before the next US government is confirmed.