News

Shares of ASML Holding (NASDAQ: ASML), the leading manufacturer of semiconductor producing equipment, were moving lower today after the company turned in disappointing results in its first-quarter earnings report.

As of 11:54 a.m. ET on Wednesday, the stock was down 7.4% on the news.

ASML comes up short

Revenue was down 22% from the quarter a year ago as the company transitions to new technology to prepare for the AI boom. It fell to 5.29 billion euros and was down even more sequentially. That result, which was equal to $5.62 billion, missed estimates at $5.87 billion.

ASML's gross margin improved from 50.6% to 51%, but operating margins fell from 32.7% to 26.3% as spending on research and development rose, along with selling, general, and administrative expenses.

Earnings of $3.30 per share were down from $5.26 in the quarter a year ago. That still beat estimates at $3.15.

CEO Peter Wennink said, "We see 2024 as a transition year with continued investments in both capacity ramp and technology to be ready for the turn in the cycle."

What's next for ASML

The news seems to signal that chip manufacturers like Intel, Taiwan Semiconductor, and Samsung aren't rushing to upgrade their equipment in order to prepare for the wave of AI-related demand.

ASML's guidance also indicated a continuing decline in year-over-year revenue. For the second quarter, the company expects revenue of $6.1 billion to $6.7 billion, which compares to $7.3 billion.

The slowdown isn't alarming because ASML's business tends to be lumpy, but a pullback in the stock seems justified as the stock had soared along with a broader AI boom since last October. Based on its guidance, dialing back some enthusiasm for the stock makes sense.

Should you invest $1,000 in ASML right now?

Before you buy stock in ASML, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

*Stock Advisor returns as of April 15, 2024

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.