Story Stocks^®

ASML (ASML -9%) is sharply lower today after releasing its Q2 results. This manufacturer of semiconductor equipment reported revenue growth of 23.2% yr/yr to €7.7 bln, which was a slight beat on expectations primarily due to one-time revenue recognition and business upgrades. The company handily beat on Q2 EPS expectations, its largest in over five years.

While the Q2 results were impressive, investors were clearly disappointed that ASML guided well below analyst expectations for both Q3 and FY25.

• In terms of why the guidance was weak, ASML said that customers are facing macro and geopolitical headwinds. Specifically, some customers are navigating specific challenges that may impact the timing of their cap-ex spend. Tariffs seem to have an impact on timing as well.
• These concerns prompted management to state, "while we are still praying for growth in 2026, we cannot confirm it at this stage." This comment seems to be adding to investors' concerns.
• Specifically, ASML now expects Q3 revenue between €7.4-7.9 bln and FY25 revenue to grow 15%, both are a good bit below expectations.
• ASML's weak guidance and cautious commentary is clearly raising concerns among investors about the semi cap equipment space heading into earnings season. As a result we are seeing some selling pressure in some of its peers like Applied Materials (AMAT -3%), LAM Research (LRCX -2%), and KLA Corporation (KLAC -2%).

While ASML's Q2 results were impressive, the cautious guidance/commentary for Q3 and FY25 are overshadowing the Q2 results. Investors appear concerned that other semi cap equipment names may have cautious outlooks as well when they report in the next few weeks.