ASML Earnings: Stock Slumps on Weaker Guidance, Lower Orders

Key Morningstar Metrics for ASML Holding

• Fair Value Estimate: $935.00
• Morningstar Rating: 4 stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of ASML Holding’s Earnings

ASML Holding’s ASML shares declined 14% after the firm accidentally published its third-quarter earnings results one day ahead of schedule. The company lowered its 2025 revenue guidance; it now expects revenue to be in the EUR 30 billion-EUR 35 billion range. Although this falls inside management’s EUR 30 billion-EUR 40 billion target set at the 2022 investor day, we expected 2025 revenue in the midpoint of that range, as commentary in the past two quarters pointed toward that goal. 2025 gross margins will also be weaker, in the 51%-53% range, compared with management’s previous target of 54%-56%, due to lower sales and postponement of some EUV orders. China should moderate to around 20% of group revenue in 2025, which we expected.

Third-quarter orders were weak, which mostly explains the weak 2025 guide, and came in at EUR 2.6 billion versus expectations of EUR 5.0 billion. Logic foundries are ramping up new nodes at a slower pace than expected, and ASML is seeing little capacity additions in memory so far. We believe Intel INTC is at the heart of ASML’s weaker outlook, as it recently postponed the opening of its Magdeburg fab, and more delays and issues could keep coming. In September, Samsung apologized to investors for its recent technological underperformance, so we believe both firms might have a more cautious 2025 perspective. In the memory market, capacity additions—aside from high-bandwidth memory needed for AI buildout—remain weak.

We’ve cut our fair value estimate for ASML to $935 per share as we reduce our 2025 and 2030 forecasts. We now assume EUR 32.1 billion in revenue in 2025, versus EUR 36 billion previously, and EUR 54.1 billion in 2030, compared with EUR 58.4 billion before. In our view, ASML is a good buying opportunity after this pullback, and the current share price is discounting an overly pessimistic long-term scenario. The stock is trading at 28.5 times its forward 2025 P/E ratio, based on our estimates.