Industry spending expectations are pessimistic, Jefferies Financial Group Inc. has downgraded the rating of ASML Holding NV ADR (ASML.US) and ASM International (ASMIY.US).

On Thursday, Jefferies Financial Group Inc. downgraded the ratings of ASML Holding NV ADR (ASML.US) and ASM International (ASMIY.US), two Dutch semiconductor equipment companies, based on concerns over industry spending. As of the time of writing, ASML Holding NV ADR's stock price fell 1.8% in pre-market trading, while ASM International dipped by 0.14%. Analyst Janardan Menon wrote in a report to clients, "We predict a 1% decline in wafer fab equipment spending in 2026, while the market consensus expects double-digit growth." He pointed out that this pessimistic outlook is based on two factors that differ from the consensus expectations: a projected 16% plunge in wafer fab equipment spending for DRAM in 2026, and further decline in wafer fab equipment spending in the Chinese market. He stated that his analysis model shows a 2% decline in sales for ASML Holding NV ADR in 2026 and a 3% increase for ASM International. The earnings per share expectations for the fiscal year 2026 for both companies are 17% and 13% lower than the market consensus, respectively. Menon downgraded the ratings of both companies from "Buy" to "Neutral", but at the same time raised the target prices from 660 euros and 490 euros to 690 euros and 530 euros, respectively. In addition to the expected decline in DRAM-related spending, Menon stated that while the installation volume of equipment for Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR's 2nm process may remain "flat", spending on advanced logic wafer fab equipment is expected to increase "modestly" next year. Furthermore, the progress of Intel Corporation's 18A process node is "largely in line with expectations", which will support its equipment spending in 2026. Finally, signs of a "cyclical recovery" in the automotive industry have emerged, and Menon believes this will drive a rebound in mature process capital expenditures outside of China next year.