Memory leader Micron stock price (NASDAQ:MU)Applied Materials (NASDAQ:AMAT)KLA Corporation (NASDAQ:KLAC) They fell sharply on Tuesday, falling 4.3%, 10.9% and 15.5%, respectively, as of 3:28 p.m. ET.
Semiconductor stocks were sold almost across the board today in response to equipment giant ASML Holdings. (NASDAQ: ASML) The third quarter financial results and forecasts, which were supposed to be announced tomorrow, were accidentally leaked.
The results and guidance were extremely disappointing and caused anxiety throughout the industry.
ASML disappointed that recovery is ‘slower than expected’
In a leaked press release, ASML posted 11.2% revenue growth and 9.1% earnings per share (EPS) growth, not terrible growth rates by any means, and last quarter’s sales beat the company’s guidance. exceeds.
However, the booking numbers and 2025 outlook, also included in the press release, were more concerning. Net bookings, which reflect changes in sales and order backlog, were only 2.6 billion euros (approximately $2.8 billion), well below expectations of 5.39 billion euros (approximately $5.87 billion).
In addition, management provided a preliminary revenue outlook for 2025 of 30 billion to 35 billion euros (approximately $33 billion to $38 billion). This still portends mid-teens growth, above the 28 billion euros (about $30 billion) expected in 2024, but below the 36.3 billion euros (about $39.5 billion) that analysts had expected. .
Management said in a press release:
While AI continues to have strong development and upside potential, other market segments are taking longer to recover. The recovery now appears to be slower than previously expected. This situation is expected to continue into 2025, leading to a sense of caution among customers.
ASML is likely referring to Intel, which has seen short-term demand decline, and Samsung, which has been plagued by operational issues and is pushing for factory expansion. ASML management has added production capacity for DRAM memory suppliers as most of them are converting unused equipment for non-artificial intelligence (AI) memory into HBM and DDR-5 production lines for AI. It was also pointed out that there are limited
The semiconductor capital equipment sector is very closely related. Therefore, if larger fabs are pushed out, not only will ASML growth slow down, but so will the etch and deposition equipment supplied by Applied Materials and, with it, the metrology and inspection equipment supplied by KLA Corporation. I will do it. So it’s not surprising to see these shares sold to ASML today for similar amounts each.
Micron also fell, given that ASML showed softening in final demand across non-AI markets. But Micron may also benefit from memory rivals scaling back investments in memory capacity. Unlike the price of advanced logic chips, memory prices can fluctuate widely based on supply and demand. Therefore, the discipline to withdraw investments can be a good thing for memory pricing. Perhaps that’s why Micron’s stock has fared better than other companies.
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Sale may be a good opportunity
This decline could present an opportunity for chip investors, as a recovery in non-AI markets is very likely to occur at some point, even if a full recovery does not occur as quickly as some expected. After all, the midpoint of ASML’s guidance still points to 16% growth next year. And more sustained growth beyond 2025 will be needed to drive fab construction into 2025-2026.
It appears that corporate budgets for 2024 will be dominated by expensive AI spending, potentially crowding out non-AI server and PC updates. However, this aging equipment will eventually need to be updated, especially as support for Windows 10 is phased out in October 2025. Additionally, as more AI-enabled devices come to market, the chip content of all PC devices should benefit. , smartphone and automobile markets are still lagging behind.
Therefore, for investors with a long-term perspective, this decline may present an opportunity to acquire high-quality semiconductor stocks like these three companies for the long term, based on a medium-term outlook.
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Billy Duberstein and/or his clients have held positions at ASML, Applied Materials, Intel, KLA, and Micron Technology. The Motley Fool has exposure to and recommends ASML and Applied Materials. The Motley Fool recommends Intel and recommends the following options: November 2024 $24 short calls on Intel. The Motley Fool has a disclosure policy.
Why Semiconductor Stocks Micron, Applied Materials, and KLA Corporation Plummeted Today was originally published by The Motley Fool
