ASML Shares Tumble. Time to Run for the Hills or Buy the Dip?
ASML's stock dropped after the company was uncertain about its 2026 growth outlook.
The company reported strong Q2 results, driven by the continued growth of AI chips.
With a virtual monopoly on the technology needed to create advanced chips, the sell-off looks like a buying opportunity.
10 stocks we like better than ASML ›
Shares of ASML Holding (NASDAQ: ASML) sank after the company warned it was uncertain about its growth outlook for 2026. The stock has fallen about 30% over the past year, as of this writing.
For those unfamiliar with ASML, the Dutch company is a semiconductor equipment manufacturer that makes the devices that foundries, such as Taiwan Semiconductor Manufacturing, use to make chips. It has a virtual monopoly on extreme ultraviolet (EUV) lithography, which is the manufacturing process used create advanced chips, such as Nvidia 's graphics processing units (GPUs).
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
The company has also developed a new technology called a high numerical aperture extreme ultraviolet lithography system, or High NA EUV, to help shrink nodes. Nodes represent the size of the transistors used on a chip, and foundries and chipmakers are continually looking to shrink node sizes, as that makes the chips more powerful and energy-efficient. However, the cost of ASML's new High NA EUV machines is around $400 million each, which has led customers to push back.
An uncertain 2026 outlook
ASML's Q2 results were actually quite strong. Revenue for the quarter jumped 23% to 7.7 billion euros ($9 billion) and came in at the high end of the company's guidance range of 7.2 billion to 7.7 billion euros ($8.4 billion to $9 billion). Its equipment sales rose nearly 18% year over year to 5.6 billion euros ($6.5 billion), while its service revenue soared 42% to 2.1 billion euros ($2.5 billion).
During the quarter, the company sold 67 new lithography systems and nine used systems compared to 89 new and 11 used systems in the year-ago quarter. However, 48% of its sales came from higher-priced EUV technology versus only 31% a year ago, as it had a large percentage of sales to China a year ago.
The company said that growth is being driven by artificial intelligence (AI) and that more customers are shifting toward EUV technology. It sees its customers looking to increase their EUV capacity by 30% this year. Overall, it is looking for a 15% increase in revenue in 2025, with a sustained improvement of its service business in the second half. It noted that the direct and the indirect impact of tariffs remains uncertain, and that it's navigating the situation the best it can.
Its net bookings, which can be a good indicator of future revenue growth, were solid, coming in at 5.5 billion euros ($6.4 billion). That was well ahead of the 4.2 billion euros ($4.9 billion) in net bookings that analysts were expecting. However, its Q3 guidance calling for revenue of between 7.4 billion euros ($8.6 billion) and 7.9 billion euros ($9.2 billion) was below the analyst consensus of 8.3 billion euros ($9.7 billion).
Looking toward 2026, the company continues to expect strong demand coming from AI. However, given the current macroeconomic and geopolitical environment -- along with some companies dealing with company-specific issues that could impact the timing of their capital expenditure (capex) -- it is unclear what its growth next year might look like.
Should investors buy the dip?
While ASML's Q2 results were strong, investors were clearly disappointed with the company's commentary about 2026. To be fair, the semiconductor equipment business is notoriously lumpy. A few large foundries make up the bulk of its EUV business, while Chinese companies had been rushing to get their lower-end equipment on fears it too would be banned in the country. Meanwhile, Intel and Samsung, two of the world's largest foundries, have had their share of struggles, which could be leading to some of the uncertainty with regard to next year.
That said, I view the sell-off in ASML shares as a buying opportunity. The company basically has a 100% market share when it comes to the EUV technology that is needed to make advanced chips. And with demand for advanced chips continuing to grow, foundries are going to need EUV machines to make them. Meanwhile, while leading foundry TSMC has balked at the high price of ASML's new High NA EUV machines, it cannot afford to delay their use indefinitely, as the cost of falling behind technologically would be much worse.
Following the market sell-off, ASML shares trade at a forward price-to-earnings (P/E) multiple of 27x based on 2025 analyst estimates. With nearly no competition for EUV lithography and growing demand for advanced chips, this is a stock you'd want to own at these levels for the long term.
Should you invest $1,000 in ASML right now?
Before you buy stock in ASML, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ASML wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!*
Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
National Post
38 minutes ago
- National Post
Derek Burney: Disillusioned Trump tries to talk tough on Ukraine
On first blush following a visit to the White House by NATO Secretary General Mark Rutte, it seemed like Donald Trump had changed his tune on Vladimir Putin. He would typically have a 'lovely conversation' with the Russian leader, the president said, then, soon after, Russian missiles would fly at night against Ukrainian civilians. Article content Trump has agreed to sell much-needed military equipment, like the Patriot air defence missiles and long-range missiles that could reach deep into Russian territory, to European NATO members for transfer to Ukraine. Among other things, the move benefits U.S. defence suppliers. Some European nations intend to send their existing supplies to Ukraine soon and obtain replacements from the U.S. Outstanding questions are: how long it will take to ship the equipment and in what quantity? Article content Article content Trump is intent on extracting the U.S. from the Ukraine conflict, which he often describes as 'Biden's war,' suggesting that Putin would never have invaded Ukraine if Trump had been president. His campaign promise to end the war in 24 hours has fallen to the wayside. He has slow-walked and even paused military shipments to Ukraine authorized by the Biden administration. For six months, Trump has steadfastly ignored the distinction between the aggressor and its victim. At least he has now succeeded in getting Europe to assume more of the burden. But some of the smaller European countries like Hungary are backsliding on NATO commitments to Ukraine. Article content Article content Trump has threatened 100 per cent secondary tariffs on countries that buy Russian oil — namely China, India and Brazil — if there is no progress toward a ceasefire and peace within 50 days — a bit like the tactic he is using unlawfully to extract concessions on trade from friends and foes alike. Trump's sanctions 'threat' is a reprieve enabling Putin to continue his summer offensive that has already subjugated more than 500 square miles of territory in Eastern Ukraine. Putin told Trump in a recent phone call that he intended to push hard for the next 60 days. John Lough of the New Eurasia Strategic Centre's think-tank observed that the intensifying Russian attacks were 'aimed to demoralize Ukraine's population and zap its will to fight.' Article content Article content Meanwhile, 85 members of the U.S. Senate want to vote on a bill that would levy tariffs 'up to 500 per cent' on countries buying Russian oil, but the Republican majority will not move forward without a green light from the White House. Article content Article content The Kremlin has stoutly rejected Trump's 50-day proposition as ' unacceptable. ' Deputy Foreign Minister Sergei Ryabkov told the state-run Tass news agency that Russia's position is 'unshakable.' Article content Despite the excessive flattery expressed by NATO's Secretary General, there are misgivings in Europe about the meaning of Trump's 50-day threat. Kaja Kallas, the EU's foreign policy chief, told reporters in Brussels that, 'Fifty days is a very long time if we see that they are killing innocent civilians every day.' Ukrainian President Volodymyr Zelenskyy, however, diplomatically thanked the U.S. president for 'his willingness to support Ukraine.' Article content No mention was made about the $300+ billion in Russian assets held in the West, primarily in Europe — funds Ukraine could desperately use to repair the infrastructure being demolished by Russian drone and missile attacks.
Globe and Mail
38 minutes ago
- Globe and Mail
This Spectacular Vanguard ETF Is on Course to Crush the S&P 500 Yet Again in 2025
Key Points Eleven sectors are represented in the S&P 500, but information technology is the largest by a country mile. Investors who haven't owned tech stocks like Nvidia, Microsoft, and Apple over the past decade have likely underperformed the broader market. The Vanguard Information Technology ETF offers investors exposure to those stocks, and over 300 others from this high-flying sector. 10 stocks we like better than Vanguard Information Technology ETF › Information technology is the largest of 11 sectors in the S&P 500, with a weighting of 33.9%. That's partly because the sector is home to the world's three most valuable companies: Nvidia, Microsoft, and Apple, which have a combined market capitalization of $11 trillion. They have each obliterated the return of the S&P 500 over the past decade: NVDA data by YCharts Investors who haven't owned those three tech titans have probably underperformed the broader market. However, they aren't the only high-flying stocks in the information technology sector, and there's a simple way to buy them all. The Vanguard Information Technology ETF (NYSEMKT: VGT) is an exchange-traded fund (ETF) that invests exclusively in information technology stocks. It outperformed the S&P 500 every year, on average, since it was established in 2004, and it's on track to do so again in 2025. The world's most dominant tech stocks packed into one low-cost ETF The Vanguard ETF isn't limited to the information technology stocks within the S&P 500 alone -- it invests across the entire sector. It holds 319 stocks from 12 \information technology subsegments including semiconductors, systems software, and application software. The semiconductor segment is the largest by far with a weighting of 30.4%, which shouldn't be a surprise considering data center hardware is at the heart of the artificial intelligence (AI) boom. Nvidia's market capitalization recently topped $4.2 trillion because of the enormous demand for its data center chips, and even Broadcom has become a trillion-dollar giant thanks to its AI hardware sales. But the AI theme is prevalent throughout the entire information technology sector. In fact, each of the top 10 holdings in the Vanguard ETF -- which represent 58.8% of the value of its portfolio -- is participating in the AI race. Stock Vanguard ETF Portfolio Weighting 1. Nvidia 16.74% 2. Microsoft 14.89% 3. Apple 13.03% 4. Broadcom 4.57% 5. Oracle 2.05% 6. Palantir Technologies 1.64% 7. Cisco Systems 1.58% 8. International Business Machines 1.56% 9. Salesforce 1.47% 10. Advanced Micro Devices 1.31% Data source: Vanguard. Portfolio weightings are accurate as of June 30, 2025, and are subject to change. Microsoft and Oracle are two of Nvidia's biggest customers. They operate a growing number of data centers fitted with thousands of AI chips, and they rent the computing capacity to businesses and developers for profit. Microsoft, however, has also become a leader in AI software thanks to its Copilot virtual assistant, which is integrated into each of its most popular products including Windows and 365 (Word, Excel, and PowerPoint). Palantir is another AI software powerhouse. It operates three core platforms: Gotham and Foundry help businesses and governments extract actionable insights from their data, and AIP (Artificial Intelligence Platform) helps them integrate AI into their everyday workflows. Prominent tech analyst Dan Ives from Wedbush Securities believes Palantir's valuation could soar by 177% to reach $1 trillion within the next three years, as enterprises race to turn their data into dollars. Outside of its top 10 holdings, the Vanguard ETF holds a number of other prominent AI software stocks. They include AI cybersecurity giants Palo Alto Networks and CrowdStrike, plus Adobe, and Snowflake, to name just a few. The best part about the Vanguard ETF might be its ultra-low cost. It has an expense ratio of just 0.09%, so a $10,000 investment would incur an annual fee of just $9. Vanguard says competing funds across the industry charge an average of 0.93%, so they are a whopping 10 times more expensive to own. On course to beat the S&P 500 again in 2025 The Vanguard Information Technology ETF generated a compound annual return of 13.7% since its inception in 2004, handily beating the S&P 500 which has returned an average of 10.1% per year over the same period. That trend looks set to continue in 2025, because the ETF was sitting on a year-to-date gain of 10.3% as of market close July 18, whereas the S&P was sitting on a lesser gain of 7.3%. Tech stocks are having yet another stellar year thanks to AI, with shares of Microsoft, Nvidia, and Palantir up 21%, 24%, and 104%, respectively. But investors should never put all of their eggs in one basket. If the AI boom falters, those high-flying stocks could suffer steep corrections which might lead the information technology sector to temporarily underperform the rest of the market. As a result, this Vanguard ETF should only be added to a diversified portfolio to mitigate risk. That strategy can still drive incredible returns if things go well. An investor who placed $20,000 in the S&P 500 in 2004 would be sitting on $167,000 today. But had they split the $20,000 equally and placed $10,000 in the S&P 500 and $10,000 in the Vanguard ETF, they would have $264,800 today. That's a life-changing difference for most people. Should you invest $1,000 in Vanguard Information Technology ETF right now? Before you buy stock in Vanguard Information Technology ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard Information Technology ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $665,092!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,050,477!* Now, it's worth noting Stock Advisor's total average return is 1,055% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
an hour ago
- Globe and Mail
Shipbuilding, aerospace to be priorities in federal strategy to transform defence sector, Joly says
Federal Industry Minister Mélanie Joly says aerospace and shipbuilding are areas where Canada can excel as the government prepares its Defence Industrial Strategy, which aims to transform the country's status as a laggard to a leader in the sector. The strategy, which Ms. Joly said should be finalized in the coming months, will be key in shaping the future of Canada's defence industry, through items such as job creation in manufacturing, strengthened ties with Europe and a renewed relationship with the private sector. 'We're doing this because, fundamentally, we cannot take our peace for granted any more,' she said in an interview Tuesday with The Globe and Mail. Prime Minister Mark Carney has committed to boosting Canada's spending on defence to 2 per cent of its gross domestic product this fiscal year, and to 5 per cent by 2035. The latter NATO target will require Canada spend up to $150-billion annually, more than double its existing budget. How should Canada rearm itself? Fix aging bases, buy submarines, air-defence systems, experts say Through military investment, Ms. Joly said she'd like to see Canada's aerospace sector rebuilt into something that resembles former versions of itself – such as in the 1950s, when the country was known for its Avro Arrow program. She'd also like to see the country's shipyards become an export market for the rest of the world. With the Defence Industrial Strategy on the way, Ms. Joly said the government isn't waiting to take action. Last week, she sent a mandate letter to the Business Development Bank of Canada, a Crown corporation, asking it to work with government on the development of the country's defence sector and sovereign capabilities, such as dual-use technology and military weapons and equipment. More specifically, she asked the bank to support small to medium-sized enterprises that make up the sector's supply chains. In the letter, obtained by The Globe and Mail, Ms. Joly concludes with a request to the BDC to provide her with 'a proposal in alignment with industry best practices to ensure that commercially viable businesses operating in the full scope of defence and security industries can access the financial supports they need to start up, grow and prosper.' It's the first of several mandate letters Ms. Joly will give out to government bodies, such as Export Development Canada, the Canadian Space Agency and the National Research Council, asking them to actively support defence-related businesses and dual-use technologies. First, however, she said the military must be at the table with the private sector to rebuild a level of trust that has been slowly degraded after successive governments failed to adequately invest in defence. 'History has shown us that when you're able to have defence and the private sector really work together, you're able to spear up innovation, make sure that your country is peaceful and, ultimately, create jobs,' Ms. Joly said in the interview. After all, companies want contracts, not subsidies, she said. Supports being rolled out by the government for Canada's steel sector are also part of its push toward building sovereign defence capabilities. For example, Ms. Joly said the country's shipbuilding and aerospace industries should be buying domestic steel. And the fact that these industries have access to a Canadian supply chain for certain materials, such as critical minerals and metals, is a large part of the reason they're being identified as priorities in building strength at home. 'We cannot have a military that is dependent on a manufacturing sector that is either on the other side of the ocean or south of the border.' Opinion: Great defence spending plan, Carney. It'd be a shame if Ottawa bureaucracy got in the way This push to be more self-sustaining is already playing out in actions taken by companies such as Seaspan, which recently signed a memorandum of understanding with Ontario-based Algoma Steel Inc. ASTL-T and Stigterstaal Canada. The partnership was formed specifically to assess the feasibility of Algoma supplying steel to Seaspan to contribute to the future of Canada's shipbuilding sector. Strategic partnerships beyond our own borders will also be a key part of the Defence Industrial Strategy. While the U.S. continues to make decisions around tariffs and its economy that serve itself, Ms. Joly said Canada is working with other countries and NATO members to become more connected. 'The test of this is actually the Defence Industrial Strategy because we will need to be working more with Europe on this, and obviously NATO, while continuing to understand that a lot of our companies are American-owned,' she said, referring to the fact that roughly 40 per cent of the 600 companies that make up Canada's industrial base are subsidiaries of U.S.-headquartered firms. Canada is open to foreign direct investment, she said, but not at the sacrifice of its own sovereign capabilities: 'We won't be an economy of subsidiaries. We will own IP and we will be able to lead the world.' Defence is a priority for this Liberal government because the world is a more dangerous place, Ms. Joly said, and Canada needs a military it can rely upon to defend itself.
