The earnings season for tech giants has just begun, and the semiconductor industry has already experienced a storm. This week, a series of heavyweight news have "exploded" in the market one after another.
On October 15th local time, Dutch lithography machine giant ASML announced its third quarter financial report. Although both revenue and profit increased, the total order amount for the quarter plummeted to 2.6 billion euros, halving from the previous quarter.
The disappointing performance triggered a strong market reaction: on the 15th, ASML's stock fell 15.6%, the largest daily decline since June 12, 1998. The next day, ASML's stock price further fell 5.1%, losing its title as the "most valuable technology company in Europe". This week, ASML's market value has evaporated by over 68.3 billion euros (approximately 74.2 billion US dollars).
Goldman Sachs, Morgan Stanley and other institutions have directly targeted Intel, believing that its reduced orders are the main reason for ASML's "explosion". Analysis suggests that although the related expenditures for AI chips such as DDR5 and HBM continue, they are not as reliant on EUV as the demand for logic chips.
Michael Roeg, a senior sell side analyst at Belgian investment bank Petermam Degroof, also pointed out in an interview with the Daily Economic News that "except for AI data centers, almost all end markets (in the entire semiconductor industry) have experienced a slowdown in growth
Not only Intel, but also Dan Hutcheson, Vice Chairman of research firm TechInsights, said that Samsung and TSMC are reducing orders for ASML devices because they already have sufficient production capacity.
But in sharp contrast to ASML, TSMC submitted a "explosive" financial report this week, with a net profit of over $10 billion for the quarter, a year-on-year increase of 54.2%. However, at the time of the impressive performance release, there were rumors in the market that TSMC and its major client Nvidia had an "internal conflict" over the Blackwell chip issue.
Next, how Blackwell will affect the performance of "AI leader" NVIDIA will be the biggest market focus. This week, the bull market in the US stock market entered its third year. In the context of overvalued technology stocks, whether the US stock market can continue to rise depends to some extent on the performance of technology giants.
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ASML's order volume has halved compared to the previous period, causing its stock price to suffer its largest single day decline in 26 years
According to the financial report, benefiting from the increase in sales of DUV (deep ultraviolet) lithography systems and installation management, ASML achieved net sales of 7.47 billion euros in the third quarter, a 20% increase compared to the previous quarter and higher than the expected 7.17 billion euros; Net profit reached 2.08 billion euros, a month on month increase of 32%, higher than expected.
However, the total order amount for the third quarter announced at the same time was about 2.6 billion euros, less than half of the nearly 5.6 billion euros in the previous quarter. Not only that, ASML has also significantly lowered its performance guidance, lowering its net sales forecast for 2025 from the previous 40 billion euros to between 30 billion and 35 billion euros.
This disappointing performance led to a 15.6% drop in ASME stocks on the 15th, marking the largest single day decline since June 12, 1998. This week, ASML's market value evaporated by over 68.3 billion euros (approximately 74.2 billion US dollars).
During Wednesday's earnings conference call, ASML did not provide detailed explanations on why its third quarter order volume was less than half of analysts' predictions, except for stating that some clients had postponed factory construction.
As a barometer of the global chip industry, ASML's performance has raised concerns in the market that the artificial intelligence (AI) boom has failed to address the broader sluggish demand for chips.
ASML CFO Roger Dassen stated at the meeting that some orders originally scheduled for 2025 have been postponed to 2026. When an analyst asked about the situation of "two customers" delaying demand, Dassen responded that it was not just two customers, but more customers who postponed orders.
Thibault Leneeuw, a stock research analyst at KBC Securities in Belgium, stated in an interview with the Daily Economic News that "we expect investors to be more critical of ASML's revenue growth expectations in the future. ASML's latest performance has led to increased uncertainty and has had a significant impact on the entire semiconductor market, especially in 2026 and 2027. Previously, the global semiconductor industry was not only expected to achieve strong growth in 2025, but also double-digit growth in both 2026 and 2027
Should Intel and Samsung take the blame for the 'explosion'?
Goldman Sachs, Morgan Stanley and other institutions have directly targeted Intel, believing that its reduced orders are the main reason for ASML's "explosion". Analysis suggests that although the related expenditures for AI chips such as DDR5 and HBM continue, they are not as reliant on EUV as the demand for logic chips, and therefore cannot offset the weakness in the logic chip field.
Moreover, despite shrinking sales and increasing losses, Intel is cutting expenses and postponed plans to build new factories in Germany and Poland last month.
Stacy Rasgon, Managing Director and Senior Analyst of Bernstein Research's US Semiconductor and Semiconductor Capital Equipment, also pointed out in a comment email to reporters that although AI demand is still ongoing, the recovery of other segments of the semiconductor industry seems to require longer than expected time.
Not only Intel, but also Dan Hutcheson, Vice Chairman of research firm TechInsights, said that Samsung and TSMC are reducing orders for ASML devices because they have realized they have sufficient production capacity. He pointed out that the utilization rate of chip factories this year is about 81%, and chip manufacturers often only purchase new equipment when the utilization rate reaches around 90%.
Last week, Samsung Electronics announced its preliminary performance for the third quarter of 2024. The company's operating profit for the quarter was approximately 9.1 trillion Korean won, far below the market expectation of 11.5 trillion Korean won. Afterwards, Samsung executives issued a rare lengthy apology statement, acknowledging that the company was dealing with a potential crisis.
Michael Roeg also analyzed to reporters in an interview, "Many analysts attribute the weak outlook for ASML in 2025 to Samsung and many other issues, such as Intel's $10 billion reduction in capital expenditures in 2025. However, I believe that TSMC has also dragged down ASML's prospects to some extent, as TSMC has considerable excess capacity in its old wafer fabs. Perhaps TSMC will reuse some of its old capacity in its new 2-nanometer wafer fabs, but this will result in the company's capital expenditures in 2025 being less than recently expected
TSMC's financial report explodes, but reports of internal strife with major client NVIDIA
However, TSMC submitted a rather explosive financial report this week.
According to the financial report released before the stock market on October 17th local time, TSMC's consolidated revenue exceeded $23 billion and net profit exceeded $10 billion in the third quarter of 2024, a year-on-year increase of 54.2% and exceeding market expectations of $9.33 billion.
The impressive performance has also driven the strong performance of TSMC's stock price. As of the close of the US stock market on the 18th, TSMC's stock price was reported at $200.78 per share, with a total market value exceeding $1 trillion.
In an interview with the Daily Economic News, Roeg said, "TSMC is the only supplier in the entire AI data center field that has a near monopoly position in the cutting-edge field, which gives them bargaining power and enables their sales growth to exceed expectations
However, at the time of the financial report release, there were reports of internal strife between TSMC and key customers in the market.
The Blackwell chip manufactured by TSMC for Nvidia won praise from the outside world when it was first launched, but recent reports from foreign media suggest that the chip's launch may have been too hasty. Two insiders revealed that just a few weeks after the release, Nvidia engineers discovered during testing that Blackwell architecture chips would not operate in the high voltage environment commonly found in data centers.
The two companies subsequently began to blame each other. TSMC claims that Nvidia's requirements for TSMC in the production process are too urgent, while Nvidia believes that TSMC has adopted the latest CoWoS-L packaging technology to package different types of chips together, leading to a slowdown in chip production.
However, some Nvidia engineers believe that this may be partly due to Nvidia's design flaws in Blackwell.
Over the past two years, Nvidia has been leading the AI hardware field with its powerful GPU technology. This week, Nvidia's stock price once again hit a new high, with a cumulative increase of over 180% so far this year and a market value of $3.39 trillion. How the new product will affect Intel's future performance is a closely watched issue by investors and industry insiders.
Nvidia CEO Huang Renxun stated in an interview with CNBC's "Closing Bell Overtime" on October 16th that the market demand for Blackwell chips has reached a "crazy" level. Everyone wants to have the most, everyone wants to be the first. "Blackwell expects a single unit price to be between $30000 and $40000, and is highly sought after by OpenAI, Microsoft, Meta, and other companies building AI data centers.
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The bull market in the US stock market has entered its third year! Technology stocks are key performers
This week, the bull market in the US stock market entered its third year. In the context of overvalued technology stocks, whether the US stock market can continue to rise depends to some extent on the performance of technology giants.
According to FactSet data, Wall Street currently expects S&P 500 companies to see a year-on-year profit growth of 4.7% in the third quarter, far lower than the previous quarter's 7.9% and the lowest growth rate in four quarters.
Specifically, among the 11 industries in the S&P 500 index, 9 industries have seen a downward adjustment in EPS expectations, with the energy industry experiencing a decrease of 19.2%, the materials industry experiencing a decrease of 9.4%, and information technology being the only industry with an upward adjustment in expectations.
Looking ahead to the performance of technology giants in the third quarter report, analysts believe that in terms of profit expectations, information technology and communication services may still be the sectors with the strongest growth in the US stock market in the third quarter, or continue to support the strength of the US stock market.
Therefore, whether the rebound of technology stocks in this round is a brief rebound in the continuous rotation of the US stock market or the beginning of a long-term rebound, the performance report of technology stocks in this US stock earnings season will give the market an answer.
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