Shares of ASML (NASDAQ:ASML) fell today for the second day in a row. After the chip maker accidentally reported results yesterday, investors appeared to react with a thumbs down to its earnings release this morning, which added some color to its optimistic 2025 forecasts.

Chip shares fell 5.6% as of 12:23 p.m. ET on Wednesday.

ASML sees declining demand

Today's earnings report didn't contain any groundbreaking revelations, but it did highlight the challenges the company faces as it anticipates a slower-than-expected recovery in demand.

Management said sales from China, which accounted for 47% of revenue in the quarter, would return to normal historical levels toward around 20% in 2025, indicating a slowdown in demand from that country. U.S. pressure has also led to a ban on exports of its most advanced equipment to China.

Yesterday the company said it expects revenue of 30 to 35 billion euros ($32.7 to 38.1 billion) in 2025, compared with a 2022 forecast of 30 to 40 billion euros. Wall Street appeared to be focused on weakness among customers Intel And Samsungalthough ASML did not elaborate on which companies were scaling back their orders. Some of this demand is expected to be delayed until 2026.

Can ASML get back on its feet?

In its comments yesterday, ASML said it still sees great potential in AI and this setback appears to be a delay rather than the result of a structural flaw in the company or industry.

Analysts will likely cut their estimates based on the news, but the stock appears reasonably valued after the two-day selloff. Given its large economic lead in lithography equipment and the temporary nature of the slowdown, ASML still appears to be a smart buy in the long term.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML. The Motley Fool recommends Intel and recommends the following options: Short November 2024 $24 Calls on Intel. The Motley Fool has a disclosure policy.

Why ASML Stock Slid Again Today was originally published by The Motley Fool