| Homepage / Portfolio / Special Reports Special Update: Next Steps with ASML after Today's "Technical Error" and Disappointing Results We were doing pretty well avoiding the usual October volatility, but we also knew to expect more. We got it today, and unfortunately, one of our stocks was part of the story.
ASML Holdings (ASML) had one of those days where you just want to go back to bed. The company first published its third-quarter results a day early on its website – a "technical error." And those results included a 2025 sales and bookings forecast lower than analysts expected.
ASML is a massively important company. It is the leading supplier of equipment used to make semiconductors, which are the foundation of our tech revolution. That makes it a foundational company, and today's news was felt throughout the sector and even the market.
Then there was a report from Bloomberg that the administration may limit chip exports to certain countries, which also dragged down pretty much all semiconductor stocks. The sector as a whole lost more than 5% for the day, as measured by the PHLX Semiconductor index as well as the VanEck Semiconductor ETF (SMH).
ASML took the brunt of it, losing 16.5%. Some buyers stepped in the last 45 minutes of trading, lifting ASML off its lows and above its Risk Point price. Still, I wanted to get in touch given the steep drop.
As is usually the case, the selling looks way overdone. Lower guidance is never a good thing in the short term, and while I will continue monitoring trading, ASML still looks like a company worth owning for the long term.
Third-quarter results were decent. Earnings of $5.80 per share were 14.4% more than a year ago and nicely beat estimates for $5.36. Sales grew nearly 17% to $8.21 billion, also beating estimates for $7.87 billion.
But lower-than-expected third-quarter bookings and 2025 guidance stole the show. Guidance for the current quarter was actually in line with expectations, but the sales forecast for 2025 got lowered from up near 40 billion euros to closer to 30 billion euros. It's worth noting that guidance was still within the previous range, so this was not an out-of-the-blue off-the-charts forecast.
CEO Christophe Fouquet acknowledged strength in AI, but said that "other market segments are taking longer to recover." That caution carried over into management's forecast.
ASML still has a solid 65.5 Quantum Score, and an equally solid fundamental rating of 75. That probably won't change much because last quarter's results were good. It's now more of the expectation game, and that's where investors get into trouble.
I believe selling ASML now would be a huge mistake, so I recommend you hold on to your shares, even if it closes below our Risk Point in the future. Doing so would more likely than not lock in big losses when that's not necessary.
I remain mindful of risk, however, and will monitor the data, ASML's trading, and news flow. I will let you know right away if anything changes. This strong and essential company in a massively important industry is still likely to bring much higher prices in the future.
Talk soon,   Jason Bodner
Editor, TradeSmith Investment Report | 
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