What Lam Research and ASML Earnings Tell Us About the Semiconductor Manufacturing Space
It has been a volatile month for semiconductor equipment manufacturers after earnings from ASML were posted on the company’s website earlier than the projected date, sending stocks in the space significantly lower. It wasn’t necessarily the earlier than expected earnings that caused the sell-off, it was the lackluster earnings guidance that didn’t sit right with investors.
ASML and Lam Research both operate in the same space, and despite the flashy headlines that Lam Research is getting about its earnings, they didn’t provide a much better outlook than ASML did. Yes, both companies beat expectations, but the common takeaway was that semiconductor equipment sales are flattening.
The biggest problem for companies like LRCX and ASML is that they got placed in the same category as semiconductor companies like Nvidia and TSM. This did benefit their stocks in the first half of the year, pushing both companies to new all time highs, but after releasing their June/July earnings, it was clear to markets that their numbers shouldn’t be compared with the NVDAs of the world.
Now, with the bar set to high, both companies will face the challenge of not only meeting expectations, but exceeding them. Both companies have grown to have extremely high valuations in the last 12 months, which is the case for many semiconductor companies, but earnings are revealing the true winners as time passes.