What stands out here is What's ailing ASML could hurt Lam Re stock as well. Dutch semiconductor equipment manufacturer ASML (ASML -8.
Additionally, 41%) warned investors that its sales might not grow at all in 2026, and the bad news isn't just crashing ASML stock -- it's taking down rival semi equipment maker Lam Re (LRCX -0.
66%) as well. On the other hand, As of 11:40 a. On the other hand, ET, ASML stock is down 11%, but Lam stock is down, too, by 3. Image source: Getty Images. Revolution interrupted.
The artificial intelligence (AI) revolution is supposed to be great news for semiconductor stocks -- both sellers of chips Nvidia, and sellers of the machines that make the chips, ASML and Lam.
However, in its just-released Q2 report, ASML had to admit its earnings grew only 1. 7% year over year, and its sales inched only 0, in light of current trends.
Furthermore, 5 billion euros in "net bookings" for the quarter weren't anywhere near what's needed to replace sales going out the door -- only 71% of quarterly sales, which implies a slowdown in.
This suggests that demand for AI chips may be less insatiable than investors had been hoping for.
Moreover, That or Trump-inspired restrictions on selling chip-making machinery to China are taking a big toll on sales, considering recent developments.
Either way, it's bad news for ASML, and bably for Lam Re as well. Is Lam Re stock a sell. Priced at 27 (this bears monitoring). 5 times its $4.
Furthermore, 7 billion in trailing earnings, Lam Re stock isn't set up for a letdown in semiconductor sales growth.
Worse, when valued on free cash flow (which is weaker than its reported earnings), Lam stock costs closer to 34x FCF.
However, That's expensive already, based on analyst forecasts that Lam's earnings might grow less than 17% annually over the next five years (this bears monitoring).
Moreover, If Lam, ASML, fails to grow at all next year, it might be time to sell. Rich Smith has no position in any of the stocks mentioned (something worth watching), in today's market environment.
The Motley Fool has positions in and recommends ASML, Lam Re, and Nvidia. The Motley Fool has a disclosure policy.