ASML Holding NV (ASML)

ASML Holding NV (ASML) stock dropped by 5.28% due to recent actions taken in response to a request from U.S. President Joe Biden and the impending enforcement of a new export ban, as reported by Bloomberg.

• Compliance with U.S. Request: ASML, a Dutch chipmaker supplier and a prominent player in Europe's tech industry, confirmed its compliance with the U.S. President's request. This involved halting certain shipments of specific lithography systems to China. Consequently, the Dutch government partially revoked licenses related to these shipments, impacting a subset of ASML's customers.
• Minimal Impact on 2023 Financial Outlook: Despite these regulatory developments and the disruption in shipments, ASML expressed confidence that the recent blockade would not have a significant adverse effect on its financial outlook for the year 2023. Nonetheless, the stock of ASML Holding N.V. experienced a notable decline of 4.3%, marking its weakest daily performance since late July.
• Challenges in the Semiconductor Market: The context of this stock drop is crucial as it occurs in the semiconductor market, which saw remarkable growth in 2023. The iShares Semiconductor ETF (SOXX) reported a 66% gain in the sector, the best performance since 2009's 74% annual increase. However, as 2024 begins, the industry is confronted with new challenges. These challenges include the looming possibility of a new tech trade war and its potential negative impact on the overall growth and stability of the semiconductor sector. Market participants are closely monitoring these developments as they navigate the uncertainties ahead.

ASML Holding Stock (ASML) dropped by 4.17% from $608.63 to $583.25 in the trading on Wednesday October 18, 2023. The reason why ASML stock down today include:

• Q3 earnings report: The report disappoints investors, causing ASML stock down today. Sales grew nearly 25% in comparison to last year's Q3. However, rising operating costs resulted in an 80-basis point decline in the operating profit margin, and ASML's net profit margin fell one full percentage point (100 basis points).
• Concern about Future bookings: Net bookings were only 2.6 billion euros in Q3, less than half the company's 6.7 billion euros in sales. With new orders not coming in nearly fast enough to replace orders going out the door, this implies that ASML is looking at a sharp slowdown in sales at some point.
• Weakness in semiconductor industry: The semiconductor industry is currently working through the bottom of the cycle. With customers uncertain about near-term demand for semiconductor chips, they're apparently holding off on ordering a lot of new equipment to build chips that they might not be able to sell.