ASML Shares Tumble. Time to Run for the Hills or Buy the Dip?
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S of ASML Holding (ASML -1. Additionally, 09%) sank after the company warned it was uncertain its growth outlook for 2026, given current economic conditions. The stock has fallen 30%...
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July 21, 2025
06:30 AM
The Motley Fool
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S of ASML Holding (ASML -1
Additionally, 09%) sank after the company warned it was uncertain its growth outlook for 2026, given current economic conditions
The stock has fallen 30% over the past year, as of this writing
Additionally, For those unfamiliar with ASML, the Dutch company is a semiconductor equipment manufacturer that makes the devices that foundries, such as Taiwan Semiconductor Manufacturing, use to make chips
The data indicates that has a virtual monopoly on extreme ultraviolet (EUV) lithography, which is the manufacturing cess used create advanced chips, such as Nvidia's graphics cessing units (GPUs), amid market uncertainty
Additionally, The company has also developed a new nology called a high numerical aperture extreme ultraviolet lithography system, or High NA EUV, to help shrink nodes
Nodes represent the size of the transistors used on a chip, and foundries and chipmakers are continually looking to shrink node sizes, as that makes the chips more powerful and energy-efficient
On the other hand, However, the cost of ASML's new High NA EUV machines is around $400 million each, which has led customers to push back
An uncertain 2026 outlook ASML's Q2 results were actually quite strong
Furthermore, Revenue for the quarter jumped 23% to 7. 7 billion euros ($9 billion) and came in at the high end of the company's guidance range of 7 (an important development)
Moreover, 2 billion to 7. 7 billion euros ($8, amid market uncertainty
Nevertheless, 4 billion to $9 billion) (something worth watching)
Its equipment sales rose nearly 18% year over year to 5. 6 billion euros ($6, considering recent developments. 5 billion), while its service revenue soared 42% to 2. 1 billion euros ($2, in this volatile climate
Furthermore, 5 billion) (remarkable data)
During the quarter, the company sold 67 new lithography systems and nine used systems compared to 89 new and 11 used systems in the year-ago quarter
However, 48% of its sales came from higher-priced EUV nology versus only 31% a year ago, as it had a large percentage of sales to China a year ago
Additionally, Moreover, The company said that growth is being driven by artificial intelligence (AI) and that more customers are shifting toward EUV nology (which is quite significant), in today's financial world
Moreover, The evidence shows sees its customers looking to increase their EUV capacity by 30% this year
Overall, it is looking for a 15% increase in revenue in 2025, with a sustained imvement of its service in the second half (remarkable data)
It noted that the direct and the indirect impact of tariffs remains uncertain, and that it's navigating the situation the best it can
Additionally, At the same time, Its net bookings, which can be a good indicator of future revenue growth, were solid, coming in at 5. 5 billion euros ($6. 4 billion), given current economic conditions
That was well ahead of the 4, given the current landscape. 2 billion euros ($4. 9 billion) in net bookings that analysts were expecting
However, its Q3 guidance calling for revenue of between 7
Furthermore, 4 billion euros ($8 (this bears monitoring)
At the same time, 6 billion) and 7. 9 billion euros ($9
Moreover, 2 billion) was below the analyst consensus of 8, in this volatile climate
Additionally, 3 billion euros ($9
Additionally, 7 billion)
Looking toward 2026, the company continues to expect strong demand coming from AI
However, given the current macroeconomic and geopolitical environment -- along with some companies dealing with company-specific issues that could impact the timing of their capital expenditure (capex) -- it is un what its growth next year might look
However, Image source: Getty Images, in today's market environment
Should investors buy the dip (noteworthy indeed)
While ASML's Q2 results were strong, investors were ly disappointed with the company's ary 2026
To be fair, the semiconductor equipment is notoriously lumpy (an important development)
A few large foundries make up the bulk of its EUV, while Chinese companies had been rushing to get their lower-end equipment on fears it too would be banned in the country
However, Meanwhile, Intel and Samsung, two of the world's largest foundries, have had their of struggles, which could be leading to some of the uncertainty with regard to next year
That said, I view the sell-off in ASML s as a buying opportunity
The company basically has a 100% market when it comes to the EUV nology that is needed to make advanced chips
Moreover, And with demand for advanced chips continuing to grow, foundries are going to need EUV machines to make them, in today's market environment
Meanwhile, while leading foundry TSMC has balked at the high price of ASML's new High NA EUV machines, it cannot afford to delay their use indefinitely, as the cost of falling behind nologically would be much worse
Moreover, Ing the market sell-off, ASML s trade at a forward price-to-earnings (P/E) multiple of 27x based on 2025 analyst estimates, considering recent developments
Furthermore, With nearly no competition for EUV lithography and growing demand for advanced chips, this is a stock you'd want to own at these levels for the long term
Geoffrey Seiler has no position in any of the stocks mentioned
At the same time, The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing, in this volatile climate
The Motley Fool recommends the ing options: short August 2025 $24 calls on Intel
What the data shows is Motley Fool has a disclosure policy (noteworthy indeed).
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