Title: ASML's Plunge: Reasons and Market Outlook

ASML's stock price plummeted on October 15, 2024, with a drop exceeding 15%, falling to $737.32, and its market value dipped below $300 billion. The main reason for this stock price decline was ASML's announcement that its third-quarter order intake was only €2.63 billion, significantly lower than the market expectation of €5.39 billion, which is just half of what was anticipated.

Furthermore, ASML also revised down its sales target for 2025, forecasting net sales to be between €30 billion and €35 billion, lower than the market expectation of €35.94 billion. These unfavorable pieces of news led to a significant downturn in ASML's stock price and had a negative impact on the entire semiconductor industry.

I. Analysis of the Plunge Reasons

1. Order Volume Below Expectations

ASML's order volume for the third quarter of 2024 was only €2.63 billion, far below the market expectation of €5.39 billion. This significant shortfall directly triggered panic in the market. The decrease in order volume not only reflects the current weak market demand but may also indicate that the demand growth rate in the semiconductor industry will slow down in the near future.

2. Downward Revision of 2025 Performance Guidance

ASML revised down its net sales and gross margin guidance for 2025 in its financial report. The net sales for 2025 are expected to be between €30 billion and €35 billion, lower than the market expectation of €35.94 billion; the gross margin is expected to be between 51% and 53%, also lower than the previously expected range of 54% to 56%. This revision has raised concerns in the market about ASML's future growth prospects, further exacerbating the stock price decline.

3. Geopolitical RisksMarket concerns persist over further trade controls by the United States in the semiconductor sector. ASML's former CEO, Peter Wennink, has indicated that U.S. chip controls in the computing field will not end in the short term, presenting a very difficult challenge for the company. Moreover, the Dutch government's recent announcement of new export regulations for immersion DUV lithography machines requires ASML to apply for licenses for some of its machines to The Hague rather than the U.S. government, which could affect ASML's ability to service and maintain its machines in the Chinese market, further increasing geopolitical risks.

4. Impact on Market Sentiment

Following the release of ASML's financial report, market sentiment deteriorated rapidly. After the opening of U.S. stocks, chip stocks plummeted collectively, with ASML's U.S. shares plunging by more than 15% at one point during trading, and chip stocks such as Nvidia and AMD also saw significant declines. Worries about the future of the chip industry intensified, leading to a gloomy overall market sentiment.

II. Market Outlook Analysis

1. Long-term Technological Advantage

Despite facing lower-than-expected order volumes and geopolitical risks in the short term, ASML's technological advantage in the lithography machine field remains significant. EUV (Extreme Ultraviolet) lithography machines are the most advanced currently available, suitable for advanced semiconductor chip processes below 7nm. ASML holds 82% of the global lithography machine market share, and its leading technological position allows it to benefit from long-term mega-trends such as artificial intelligence.

2. Demand from Artificial Intelligence

The development of artificial intelligence will continue to drive the demand for advanced chips. ASML's EUV lithography machines play an irreplaceable role in the production of advanced chips. Although current market demand is weak, as artificial intelligence technology further develops, the demand for advanced chips will gradually recover and grow in the future.

3. Responding to Geopolitical RisksASML is actively addressing geopolitical risks. The company is further consolidating its competitive advantage in the high-end lithography equipment sector through supply chain management and joint research and development with customers. Although the export control policies of the United States and the Netherlands have had a certain impact on ASML's short-term performance, the company has taken measures to reduce the negative effects of these policies.

4. Market Valuation and Investment Opportunities

Despite the significant short-term decline in ASML's stock price, its long-term growth potential remains. The market valuation of ASML has already reflected the current geopolitical risks and weak market demand. In the long run, ASML's technological advantages and market position give it strong risk resistance capabilities, and it is expected to resume growth in the future. Therefore, the current stock price decline may provide investors with a good buying opportunity.

The sharp decline in ASML's stock price is mainly due to lower-than-expected order volumes, a downward revision of the 2025 performance guidance, and geopolitical risks. However, in the long term, ASML's technological advantages in the lithography equipment field and the growth of artificial intelligence demand provide it with broad development prospects. Although facing challenges in the short term, the company has taken measures to address these risks and is expected to resume growth in the future. Therefore, the current stock price decline may provide investors with a good buying opportunity.