Analysts suggest that ASML’s disappointing performance is unrelated to Nvidia’s results. On Tuesday, October 15, shares of US semiconductor stocks took a significant hit, with the Philadelphia Semiconductor Index dropping over 5% and Nvidia’s stock falling by 4.5%. However, a recent analysis from Barron’s indicates that the drop in Nvidia’s stock may be an overreaction from investors, as a closer examination of Nvidia’s business outlook suggests that such a sharp decline isn’t justified.
Earlier on Tuesday, ASML briefly posted its latest financial results on its website ahead of the scheduled announcement on Wednesday. The report revealed a downward revision of its net sales forecast for 2025 to between €30 billion ($32.7 billion) and €35 billion, which is below the market expectation of €35.8 billion.
In the previous quarter, ASML reported an order volume of €2.63 billion, which fell short of market estimates by about half.
ASML is known for producing extreme ultraviolet (EUV) lithography equipment, a critical tool for advanced semiconductor manufacturing, with clients including TSMC, Samsung, and Intel.
In a press release, ASML CEO Peter Wennink said, “While AI continues to show strong growth and has significant upside potential, other market segments are taking longer to recover. It’s now clear that the recovery is more gradual than previously anticipated, and we expect this situation to persist into 2025, leading to a cautious outlook from our customers.” He added that “the competitive foundry environment has slowed the ramp-up of new nodes for certain clients, displacing several fabs and altering the timeline for demand in exposure, particularly for EUV.” Consequently, ASML’s stock price plummeted by 16%.
Barron’s analysis highlighted that ASML’s weak performance is primarily related to the logic chip segment rather than AI. The report noted that ASML has indicated strong demand driven by AI, while the softness is rooted in the logic chip market, likely influenced by Intel’s reductions in capital expenditure amid a painful restructuring process.
Henry Ren, a Bloomberg reporter, pointed out that ASML’s lackluster performance could stem from Intel’s capital spending cuts. Additionally, the recent decline in memory chip prices has caused caution among manufacturers. Ren also mentioned that demand for chip equipment in China may be cooling after a period of excess inventory. However, these factors appear to be unrelated to AI demand.
Nvidia has consistently stated that demand for its AI GPUs remains robust. Earlier this month, Nvidia assured investors that even with a significant increase in supply this year, “demand continues to outstrip supply.”
Last week, Nvidia executives announced that their Blackwell GPU products are “already booked up for the next 12 months,” implying that new customers placing orders now would not receive products until the end of next year.
Nvidia’s flagship Blackwell AI server system is currently being shipped. On Tuesday, Dell announced that its PowerEdge XE9712, built on Nvidia’s GB200 NVL72 system, “is now providing samples to specific customers.”
The NVL72 is a standout product in Nvidia’s Blackwell lineup, connecting 36 GB200 super chips, each linking two Blackwell GPUs to Nvidia’s Grace CPU for enhanced operational efficiency. This means every NVL72 system comprises 72 interconnected Blackwell GPUs, delivering unprecedented computational power. Earlier this year, KeyBanc reported that the NVL72’s price is approximately $3.8 million, representing the vast majority of Nvidia’s GB200 shipments.
Thus, Barron’s conclusion suggests that ASML’s business situation doesn’t have a direct correlation with Nvidia’s performance.
