By Adam Clark

ASML Holding stock has fallen sharply from its lofty highs of last year. Things aren't likely to improve for the chipmaking equipment company until customers Intel and Samsung Electronics invest more, according to Mizuho.

ASML has a virtual monopoly on the advanced machines used to manufacture the latest chips. That made it a popular stock to play the artificial-intelligence boom, but its American depositary receipts have fallen by nearly a third over the past 12 months.

The pressing issue is a slowdown on spending on ASML's most advanced extreme ultraviolet lithography, or EUV, machines by Samsung and Intel.

That doesn't look set to get better in the short-term, according to Mizuho analyst Kevin Wang, who lowered his rating on ASML to Neutral from Buy. He lowered his target price on the Amsterdam-listed stock to EUR650 (about $703.58) from EUR810 previously.

ASML shares in Amsterdam were down 1.1% at EUR613 on Wednesday. Its American depositary receipts were up 0.1% at $668.28 in early training.

ASML's sales are set to drop 3% in 2026 from this year, and earnings per share are likely to stay broadly flat as total EUV shipments fall to 49 units from 53 units in 2025, according to Wang. A lack of spending from Samsung and Intel is set to make the company more dependent on Taiwan Semiconductor Manufacturing, or TSMC.

"We see some EUV shipments pull-in for TSMC in 2025 based on our estimated EUV installation, which should lead to EUV shipments decline in 2026. In addition, we expect limited upside potential for Samsung and Intel in 2026," Wang wrote.

The analyst estimates TSMC's EUV shipments might decline to 15 units in 2026 from 18 units in 2025, while Samsung's EUV shipments are set to stay at 10 to 15 units and Intel's EUV shipments could drop to 10 units in 2026 from 12 units in 2025.

However, there was one silver lining: Wang noted ASML's first-quarter sales could beat expectations due to strong demand from China.

ASML will announce its first-quarter results on April 16.

Write to Adam Clark at adam.clark@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 02, 2025 10:20 ET (14:20 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.