Why did ASML Holding stock fall today?

Leading Manufacturer of Semiconductor Production EquipmentASML Holding Company (NASDAQ resonance code: ASML)Shares were lower today as the company announced disappointing business results in its first-quarter earnings report.

As of 11:54 a.m. EST Wednesday, the company's stock was down 7.41 TP3T on the news.

Poor performance of ASML

Revenues fell 22% from the year-ago quarter as the company transitioned to new technology to prepare for the artificial intelligence boom. revenues fell to €5.29bn, an even steeper decline from the year-ago quarter. This came in at $5.62 billion, below expectations of $5.87 billion.

ASML's gross margin improved to 51% from 50.6%, but operating margin declined to 26.3% from 32.7% due to higher R&D expenditures as well as higher selling, art and Koon expenses.

Earnings per share were $3.30, down from $5.26 in the same period last year. However, it was higher than the expected $3.15.

We are targeting 2024 as a transition year, and will continue to invest in capacity enhancement and technology to prepare for the turn of the cycle," said Peter Wennink, Chief Executive Officer.

ASML's Next Steps

This news seems to indicate thatIntel,Taiwan Semi-Conductorrespond in singingthe belt of OrionChipmakers such as the U.S. Department of Defense (DOD) are not rushing to upgrade their devices to meet the wave of AI-related demand.

ASML's guidance also indicates that the company's revenue will continue to decline year-over-year. The company expects second-quarter revenue of $6.1 billion to $6.7 billion, compared with $7.3 billion in the same period last year.

A slowdown in ASML's business, which tends to be volatile, is not a cause for concern, but with the rise of artificial intelligence since October of last year, ASML's stock price has been on a tear, so a correction in the stock's price seems to be justified. According to its guidance, it would make sense to see a reversal of the enthusiasm for the name.

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Jeremy Bowman does not own any of the stocks mentioned above.The Motley Fool recommends ASML and Taiwan Semiconductor Manufacturing Company.The Motley Fool recommends Intel and suggests holding the following options: long Intel January 2025 $45 calls and short Intel May 2024 $47 calls.The Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.

Why did ASML Holding stock fall today?