The 2024 AI Frenzy Isn't Helping ASML Stock. Here's Why.

Core Viewpoint - ASML's stock has fallen over 6% following disappointing Q1 2024 results, with net bookings significantly below analyst expectations [1][2]. ASML and the Q1 Results - ASML reported net bookings of 3.6 billion euros ($3.84 billion) for Q1 2024, falling short of the average analyst estimate of nearly 5.1 billion euros [2]. - The company's net profit decreased to 1.22 billion euros ($1.29 billion) from 2.05 billion euros in Q4 [2]. - Revenue also declined to 5.2 billion euros ($5.52 billion) from 7.24 billion euros [2]. - Analyst Ben Barringer highlighted concerns regarding the "incredibly uncertain" economic environment and a forthcoming "transition in product" for chipmakers in 2025 as factors contributing to ASML's weaker performance [2]. ASML's Outlook - Despite the disappointing orders, ASML has maintained its 2024 guidance, anticipating a rebound in the chip sector in Q3 and Q4 [3]. - The company expects overall 2024 revenue to remain relatively unchanged compared to 2023, with CEO Peter Wennink describing 2024 as a "transition year" [3]. - ASML forecasts improved results in 2025, driven by new fabs opening in the U.S. by major chipmakers like Taiwan Semiconductor and Samsung [3]. - Increased spending on ASML's machinery is expected as chipmakers prepare for the next phase of the AI spending cycle [3]. - Analysts at ING suggest that fluctuations in ASML's order totals are common and should not overly concern investors [3]. The Price Action of ASML Stock - Prior to the recent downturn, ASML shares had been stable over the preceding month but had increased by over 25% in 2024 [4].