ASML stock chart

ASML Fires Warning Shot For Tech Investors

ASML stock chart

ASML (NASDAQ: ASML) struggled in Q1 and has a warning for semiconductor investors. The warning is that new orders were less strong than hoped and undercut the semiconductor industry's outlook. A sizeable portion of new orders included the cutting-edge EUV technology, but not enough to support the inflated outlook driven by AI. 

This means that chipmakers' results could be weaker than expected going forward and worse; guidance may also be weak and lead the tech sector into a deep depression. Shares of stocks like AMD (NASDAQ: AMD) and NVIDIA (NASDAQ: NVDA) are down from their peaks but still up substantially for the year and from last year’s lows, leaving them in a precarious position. Names like Intel (NASDAQ: INTC), Taiwan Semiconductor (NYSE: TSM), and Samsung (OTCMKTS: SSNLF), which are more closely tied to ASMLs business, are also set up to extend their recent declines. 

ASML Has Weak Quarter But Reaffirms Guidance 

ASML had a weak quarter in Q1, with revenue falling 21% compared to last year due to new and used equipment weakness. New equipment sales fell 42%, while used equipment sales fell 64%. The guidance for Q2 is decent, with sequential growth expected, but the net bookings offset the impact. Net bookings fell 60% sequentially, suggesting caution among the chipmakers. 

The margin is decent and held steady compared to last year. The gross margin fell 40 basis points but less than expected to drive better-than-expected bottom-line results. The GAAP $3.31 outpaced the consensus by $0.40 but may not be directly comparable due to FX translation. The results were solid enough to sustain the dividend and dividend growth. The board announced the final payment for 2023 which converts to $1.86 with the EUR/USD at $1.06. 

Guidance is also decent, but expects a significant pivot in the back half of the year that may not come. Q2 revenue should accelerate to the range of $6.07 to $6.6 billion, with significantly stronger results in the back half. The full-year outlook was reaffirmed at flat compared to last year, with caution that this is a transition year. The business expects to resume growth in 2025, driven by next-gen and AI technologies supported by the CHIPs Act (in the US) and demand globally. 

ASML Capital Returns Will Continue to Flow

ASML’s dividend yield is not large, and the payouts can be erratic due to the distribution policy, but the payment is safe and reliable. The company pays less than 35% of its earnings and maintains a fortress balance sheet. 

Balance sheet highlights from Q1 include a reduction in cash and assets offset by lower debt and liabilities, resulting in increased shareholder equity. Leverage is less than 0.35X equity, total liabilities are less than 2X equities and cash is about 5X. The cash flow and balance sheet allow for share repurchases, but there is a catch. Repurchases did not offset dilutive actions over the past year, and the share count is rising. 

Analysts support this market but may cap upward momentum now that results and guidance are in. The trend in 2024 is positive, including numerous price target increases, upgrades, and initiated coverages, but may have overestimated the timing of the foundry-market recovery. The consensus is up 33% compared to last year and predicts a 5% upside from the pre-release action, about 10% with the post-release decline, but it is unlikely to rise further. 

ASML Struggles With Resistance: A Deeper Decline is Possible

Shares of ASML fell 5% in premarket trading following the Q1 release. The move confirms that resistance at the recent highs is strong and has the market set up to reverse. Critical support is near previous highs at $885 and may be tested soon. If support does not hold at this level, the market could fall to $800 or lower. Such a move would create a value opportunity in this market and set up a buying opportunity; the question is when the rebound in equipment sales will gain traction. 

ASML stock chart

Learn more about ASML

Newest Stories

New Home construction
Homebuilders in Freefall: Bargain Opportunity or Falling Knife?

The homebuilders sector has recently come under significant pressure, with the SPDR S&P Homebuilders ETF (NYSEARCA: XHB) officially entering bear market territory. At the start of this week, the ETF is down nearly 24% from its 52-week high and over 8% year-to-date (YTD). With the sect...

Ryan Hasson | Apr 02, 2025

Montreal, Canada - February 3, 2021: Wallstreetbets Reddit group webpage and logo under magnifying glass. Wallstreetbets, also known as WSB, is a subreddit where participants discuss stock trading.
The 3 Most Talked About Investments on WallStreetBets Right Now

WallStreetBets (WSB) burst onto the investing scene in early 2021 as retail investors banded together to take on institutional players. The popular trading subreddit led a short squeeze against hedge funds with large short positions in GameStop (NYSE: GME). GameStop shares soared due to the collec...

Leo Miller | Apr 02, 2025

New York, USA - 17 February 2021: CrowdStrike logo close up on website page, Illustrative Editorial
Analyst Targets Signal More Growth in CrowdStrike Stock

The fact that CrowdStrike Holdings Inc. (NASDAQ: CRWD) is beating the broader market in 2025 isn’t particularly noteworthy. It is noteworthy that, after an infamous outage in July 2024, CRWD stock didn’t just recover; it soared to an all-time high in February 2024. And even after a dro...

Chris Markoch | Apr 02, 2025

June 8, 2020, Brazil. In this photo illustration the Howmet Aerospace logo seen displayed on a smartphone. — Stock Editorial Photography
Why Howmet Could Be the Sleeper Aerospace Name of 2025

Defense and aerospace stocks have had a fairly strong first quarter of 2025. As of March 31, the benchmark iShares U.S. Aerospace & Defense ETF (BATS: ITA) has climbed 17% in the last year and nearly 6% year-to-date (YTD), beating the S&P 500 over both timeframes given the recent correc...

Nathan Reiff | Apr 02, 2025

TickerTalk Unveils Real-Time Financial Insights and Breaking News!