ASML Earnings: ASML Nosedives as Macro Concerns Overshadow Q2 Results

ASML Holding (ASML) (ASMF) shares plunged by over 7% today as the Dutch advanced semiconductor equipment maker’s second-quarter results were overshadowed by concerns associated with the rising trade skirmishes between the U.S. and China.

ASML’s Q2 Performance

During the quarter, revenue declined by nearly 10% year-over-year to €5.29 billion. ASML sold 89 new lithography systems in Q2, compared to 66 units in the first quarter. concurrently, its sales of used lithography systems jumped to 11 from 4 units in Q1. Additionally, the company’s net bookings sequentially improved to €5.57 billion from €3.6 billion in Q1.

Moreover, a healthy gross margin of 51.5% helped ASML sequentially improve its EPS to €4.01 from €3.11. Importantly, ASML is seeing improved lithography system utilization levels at its customers and anticipates continued recovery in the industry in H2 2024. For Q3, ASML expects net sales to be in the range of €6.7 billion and €7.3 billion.

Potential Challenges for ASML

While ASML’s Q2 bookings rose by 54%, investors remain concerned about the current macroeconomic setup. China accounts for around half of ASML’s top line. However, the U.S. is increasingly looking to restrict China’s access to sophisticated semiconductor technology. According to Bloomberg, the U.S. is targeting ASML as the company enjoys a monopoly in certain lithography machines. Consequently, stringent U.S. tech curbs in the future could potentially impact ASML’s performance.

Is ASML a Buy, Sell, or Hold?

Today’s price decline comes after a nearly 50% jump in ASML’s share price over the past six months. Overall, the Street has a Strong Buy consensus rating on the stock, alongside an average ASML price target of $1092.50. However, analysts’ views on the company could see a revision following today’s earnings report.

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