ASML: Morgan Stanley Downgrades ASML Again on Concerns About China, Memory, Intel

Morgan Stanley on Friday cut its earnings estimates for chipmaker ASML, the latest brokerage firm to do so in response to a weakening memory chip market and concerns about demand from Chinese chipmakers and Intel.

MS followed UBS and Deutsche Bank in cutting its estimates and price targets for ASML shares after the company’s share price fell 30% in July and August.

“Investors may have to contend with weakness not only in the DRAM (memory chip) market but also in Intel… and growing concerns that China’s semiconductor overcapacity will slow as the 2026 deadline approaches,” the MS analysts wrote.

ASML shares fell 2.7% to 727.80 euros at 12:09 GMT on Friday.

Intel last week put its expansion plans in Germany on hold for two years to curb capital spending as it overhauls its custom-chip unit.

MS hedged its opinion by noting that ASML will continue to see strong demand in 2025, driven by the use of artificial intelligence in the production of its most advanced EUV tools by leading chipmaker TSMC.

“History warns against being too negative on ASML before the order cycle peaks,” it said. Deutsche Bank analysts also questioned the prospects for ASML’s business in China, which accounted for almost half of ASML’s second-quarter sales despite being in its less advanced DUV product line.

“We now understand that the outlook for China’s delayed spending has worsened, and excess capacity has emerged,” the analysts wrote.

Deutsche Bank said Chinese memory chip makers such as CMXT could be placed on a U.S. entity list, which would restrict trade with certain companies and limit ASML’s ability to sell products to them.

Citi on Wednesday announced that ASML is its top pick in the technology sector in Europe following the summer sell-off.

Analysts say they expect a significant influx of orders when the company releases its earnings report on Oct. 16.

(Reporting: Toby Sterling; Editing: Susan Fenton)