asml weathers export storm: buy the dip?
amsterdam, Monday, 15 September 2025.
asml, the linchpin of advanced chip manufacturing, saw its stock plummet 8.3% following a disappointing earnings report. export restrictions to china are significantly impacting sales. despite its monopoly on euv lithography machines, asml’s management expressed uncertainty about revenue growth in 2026. investors are now weighing whether the dip presents a buying opportunity, considering the company’s long-term potential amid geopolitical headwinds and a lowered backlog of 1.4 billion euros.
Financial performance and market reaction
ASML’s recent earnings report revealed a mixed financial landscape. The company reported a 23% increase in revenue to 7.69 billion euros for the second quarter of 2025, with 67 new lithography machines sold [1]. Net bookings also rose from 3.9 billion euros in the first quarter to 5.5 billion euros [1]. However, gross margin experienced a slight decrease from 54% to 53.7%, and earnings per share fell from 6.00 euros to 5.90 euros [1]. This underwhelming performance, coupled with lowered expectations, triggered the stock’s 8.3% drop on september 10, 2025 [1].
impact of export restrictions on backlog
The impact of export restrictions to China has been a significant factor in asml’s recent challenges. Management cited these restrictions as the reason for lowering its backlog by 1.4 billion euros, bringing the total backlog down to 33 billion euros [1]. These restrictions, initiated by the u.s. government in 2019, prevent asml from selling its most advanced euv machines to china, effectively limiting china’s ability to produce cutting-edge semiconductors [4]. This strategic move has placed asml at the center of the technological competition between the u.s. and china [4].
future outlook and strategic partnerships
Looking ahead, asml anticipates 15% revenue growth for the third quarter of 2025, projecting revenue between 7.4 billion and 7.9 billion euros [1]. Despite this near-term optimism, ceo roger dassen has expressed uncertainty regarding revenue growth in 2026, citing macroeconomic and geopolitical factors [1]. Adding to the complexity, asml announced a new partnership with a chinese company on september 13, 2025, though specific details remain limited [7]. This development occurs as china intensifies its efforts to develop domestic semiconductor capabilities, with companies like smee making strides in lithography technology [7].
technological dominance and market position
Asml’s dominance in the euv lithography market remains unchallenged. The company stands as the sole producer of these essential machines, which are critical for manufacturing advanced chips [1][4]. Each euv machine costs around $200 million and takes over a year to build, highlighting the complexity and precision involved [4]. Despite competition, asml’s technological lead is substantial [4]. Competitors have struggled to replicate its euv systems, investing billions in research and development without success [4]. This technological advantage underpins asml’s long-term growth potential, despite current headwinds.
assessing the investment opportunity
The recent stock dip has led to debates about whether asml represents a buying opportunity. At a price-to-earnings ratio of approximately 30, the stock’s valuation reflects its growth prospects and market dominance [1]. While the motley fool stock advisor team did not include asml in their list of top stocks, the company anticipates revenue between 44 billion and 60 billion euros by 2030, with gross margins improving to 56% to 60% [1]. However, potential investors must consider the risks associated with export restrictions, geopolitical tensions, and uncertainty surrounding near-term revenue growth [1].