Arm Holdings Plc (NASDAQ:ARM) shares are trading lower Wednesday alongside several semiconductor stocks following soft guidance from ASML.

What Happened With ASML: ASML Holding N.V. (NASDAQ:ASML) reported second-quarter sales of €6.242 billion ($6.82 billion), which beat analyst estimates of €6.032 billion, according to Benzinga Pro. The company reported second-quarter earnings of €4.01 per share, which beat analyst estimates of €3.71 per share.

Despite beating analyst estimates on the top and bottom lines, ASML issued weak guidance for the third quarter. The company said it expects third-quarter net sales of €6.7 billion to €7.3 billion versus estimates of €7.608 billion. ASML also guided for third-quarter gross margin between 50% and 51%.

"We see 2024 as a transition year with continued investments in both capacity ramp and technology. We currently see strong developments in AI, driving most of the industry recovery and growth, ahead of other market segments," said Christophe Fouquet, president and CEO of ASML.

Why It Matters: Arm Holdings is due to report financial results for its fiscal first quarter on July 31. The company is expected to report earnings of 34 cents per share and revenue of $903.573 million, according to estimates from Benzinga Pro.

Last quarter, Arm beat analyst estimates on the top and bottom lines and introduced guidance for fiscal year 2025. The company noted at the time that it had strong tailwinds heading into the year driven by increased demand for Arm-based technology "across all end markets."

"From cloud to edge, all AI software models, from GPT to Llama, rely and run on the Arm compute platform. As these models become larger and smarter, their requirements for more compute with greater power efficiency can only be realized through Arm," CEO Rene Haas said.

ARM Price Action: Arm shares were down 4.30% at $171.09 at the time of publication, according to Benzinga Pro.

Photo: Shutterstock.