An unexpected revelation by semiconductor equipment specialist ASML Holding N.V. hurt the broader technology sector, resulting in the Nasdaq index dropping by 1% on Tuesday. ASML’s premature release of its third-quarter earnings report triggered upheaval in the computer chip industry.
Significant Market Impact
According to Benzinga Staff Writer Piero Cingari, the report unveiled a major revision to ASML’s 2025 net sales guidance, now estimated between 30 billion euros and 35 billion euros ($32.7 billion to $38.2 billion) – a downgrade from the initial range of 30 billion euros to 40 billion euros.
Despite continued strong demand for artificial intelligence, other market sectors failed to see significant improvement. ASML’s President and CEO Christophe Fouquet stated that the recovery was slower than anticipated, leading to cautiousness among customers.
To compound the issue, ASML shared that its 2025 total net sales might only reach between 30 billion and 35 billion euros, falling within the lower end of the guidance offered during its Investor Day conference.
Options Market Response
The options market reacted swiftly to ASML’s news, with prominent players taking bearish positions on ASML stock. Professional and institutional investors heavily gravitated towards put options expiring from this week up to March 21 of the following year.
Direxion’s Leveraged ETFs
Amidst the tech turmoil, Direxion’s leveraged exchange-traded funds (ETFs) have emerged as high-risk, high-reward investment vehicles. The Direxion Daily Semiconductor Bull 3X Shares (SOXL) cater to bullish traders, while the Direxion Daily Semiconductor Bear 3X Shares (SOXS) are tailored for those with a pessimistic outlook. Both SOXL and SOXS aim for 300% daily returns (or inverse) of the NYSE Semiconductor Index, emphasizing short-term holdings due to their 3X leverage.
Due to the volatile nature of daily leverage, particularly in the inverse SOXS, investors are advised to exercise caution and exit positions before the trading session concludes.
Performance Overview
Although the SOXL ETF is positive for the year, the extreme leverage has only translated into moderate gains. The ETF’s price dipped below its 50-day moving average following ASML’s shocking disclosure, signaling turbulence ahead.
Market Responses: SOXL and SOXS
Contrary to the solid tech sector performance, the SOXS ETF has faced significant losses, dropping over 63% since the start of the year. With a bearish trend persisting, Tuesday’s disclosure provided a brief 18% lift to the 3X bear fund, injecting a glimmer of hope.
