ASML stock slides on new export controls

Shares of ASML (ASML) are falling after the Dutch government announced increased export controls on advanced chip manufacturing equipment, citing national security concerns. Earlier, Morgan Stanley removed the company as a "top pick" for European semiconductors and slightly lowered its price target.

Catalyst Hosts Brad Smith and Madison Mills break down the impact of export controls and whether the company's growth story can push forward as the chip sector as a whole is under pressure.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

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Let's get to it though with a SML under pressure today after the Dutch government announced increased export controls on advanced chip manufacturing equipment.

Citing national security concerns also shares are down as Morgan Stanley removing a SML from its top A I pick list.

This is something that is critically watched on the street is an indication particularly of where stocks within the semiconductor sector are heading.

Now, the brokerage did maintain their overweight rating on a SML but they lowered the price target slightly and they kind of assess the business and looked at it as a potential slowdown to come just in terms of the growth story.

And Brad, I think that's something that's been a theme across several of these chips names, not only the news with the Netherlands in terms of the export controls, but also can the growth story keep up?

And I think that's something that put Broadcom under pressure in their earnings and certainly was the same story with NVIDIA as well.

Yeah.

So for Sas Ml, I'm going to approach this from a little bit of a different perspective here and perhaps we can throw up a longer term chart for them, maybe a one year or a year to date.

Either one of them will do.

We're not quite at some of the year to date lows for this company.

Uh We still have a ways to go to get to that point.

As you can see, that's where you saw that kind of red territory early on in the year where the company was in decline.

So we're not quite there yet, but here's why I bring this up.

There's some support that this company might retest at this level even in this longer term, uh higher trend that we've seen.

And so even if they were to set a higher low here, that going to be the larger question as to whether or not they can bounce off of that support and continue to kind of regain some strength here.

Now, what you were mentioning is more key in the entrenchment that the Dutch government is looking for for some of the intellectual property stemming from companies that operate in its region here.

So something for both the technical traders and for uh the moat traders out there as well.

Well said though Brad, that's a really good point in terms of the fundamental piece there as well.