- Q2 sales and profit ahead of expectations
- Q3 outlook falls short of consensus
- Strong upturn expected in 2025
Semiconductor equipment maker ASML (ASML:AMS) dropped more than 6% to €919, despite delivering better than expected second quarter sales and profit, after the company forecast third quarter sales below consensus estimates.
The shares fell to their lowest level since mid-June but remain almost 40% higher since the start of the year and comfortably ahead of the Nasdaq Composite’s 25% return.
STRONG QUARTERLY BEAT
Net sales for the three months to the end of June came in at €6.24 billion, the top end of company guidance with net profit of €1.58 billion, around a tenth higher than the €1.43 billion called for by consensus.
The second quarter outcome represents a 10% fall in sales and 19% drop in net profit compared to 2023 reflecting a tough year for the semiconductor industry.
Net system bookings, or orders for ASML machinery, increased 24% year on year to €5.56 billion equating to 64% sequential quarterly growth.
BUILDING FOR STRONG UPTURN IN 2025
ASML left its full year outlook unchanged, expecting sales close to the €27.55 billion it generated in 2023, but the second half is expected to be ‘significantly’ stronger than the first half as the industry recovers from the downturn.
CEO Christophe Fouquet said his charge continues to make investments both in capacity ramp and technology to be ready for the expected strong demand in 2025.
‘We currently see strong developments in AI driving most of the industry recovery and growth ahead of other market segments. Based on discussions with our customers and supported by our strong backlog, we currently expect 2025 to be a strong year’, said Fouquet.
ASML remains at the forefront of new technological developments and revealed it has achieved images with a resolution of eight nanometres, a new world record for chip-making density.
For context, regular EUV (extreme ultraviolet) or low NA (numerical aperture) machines are capable of producing features approximately 13.5 nanometres in size.
THE EXPERT’S VIEW
Dan Coatsworth, investment analyst at AJ Bell, commented: ‘ASML is further proof that the AI boom still has legs. Demand is soaring for the semiconductor equipment maker.
‘Companies across countless industries are investing heavily in AI which means chip makers have the confidence to build more manufacturing plants. That feeds into greater demand for ASML’s equipment which plays a crucial role in the production of computer chips.
‘Two negative factors triggered the share price pullback. Third quarter guidance wasn’t as strong as expected and China still represents nearly half of ASML’s sales, making geopolitical risk a big issue for investors to digest.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor (James Crux) own shares in AJ Bell.
