ASML's Divergence With AI Giants Led by Nvidia Seen in Options Market
$ASML Holding (ASML.US)$ continued slump signaled divergence among chipmakers, with those with the biggest exposure to artificial intelligence led by $NVIDIA (NVDA.US)$ showing greater resilience. As expected, that's also spilling over to the options market.
ASML's American depositary receipts (ADRs) tumbled Wednesday, taking its two-day loss to almost 21%, after the Dutch company reported a day earlier that its net bookings shrank by about half in the third quarter from the previous three months. Those orders missed analysts' expectations by 51%, according to estimates compiled by Bloomberg.
The Dutch company that produces machines for semiconductor making counts Samsung Electronics and $Intel (INTC.US)$ as its second and third biggest customers. ASML has been weighed down by the slow recovery.
"I think today without AI, the market would be very said, if you ask me," ASML Chief Executive Officer Christophe Fouquet said in the company's earnings call with analysts Wednesday, according to a transcript published by Bloomberg. "But for the rest, I think our customer continues to confirm that when it comes to mobile, when it comes to PC, sorry, when it comes to automotive, the recovery is not what I think everyone had wished for."
While ASML posted an almost 12% growth in revenue in the three months that ended in September, that's far lower than the 122% expansion seen by AI leader Nvidia in the second quarter. Even though Nvidia's growth is seen slowing, analysts on average still expect the AI darling to report an almost 83% gain in revenue to about $33 billion in the third quarter.
The biggest volume among ASML contracts is in put options that give the holders the right to sell the ADRs at $650 in two days. That could signal worries of potential continued decline for the ADRs that are now trading less than $40 above that strike price.
The bearish sentiment for ASML is also seen in the capital trend data. Outflows from ASML outpaced inflows by $271.7 million. Nvidia, on the other hand, saw a net inflow of more than $405 million.
The heaviest volume among Nvidia options are in callsgive the holders the right to buy the stock at $134 by Friday, followed by $135 calls. That may be viewed as a sign that the stock will sustain its gains, allowing the contracts tobe in-the-money before they expire in two days.
Share your thoughts on ASML and Nvidia in the comments section.
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Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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