Shares of leading semiconductor equipment manufacturer ASML Holding (NASDAQ: ASML) took a hit today as the company reported disappointing financial results for the first quarter of the year. The stock was down 7.4% following the release of the earnings report.

The company's revenue for the quarter dropped by 22% compared to the same period last year, amounting to 5.29 billion euros ($5.62 billion). This figure fell short of analysts' estimates, which had projected revenue of $5.87 billion. ASML's gross margin did show improvement, rising from 50.6% to 51%. However, operating margins fell from 32.7% to 26.3% due to increased spending on research and development, as well as higher selling and administrative expenses. Earnings per share came in at $3.30, lower than the $5.26 recorded in the first quarter of the previous year, but above the estimated value of $3.15.

ASML CEO Peter Wennink commented on the disappointing results, stating that the company views 2024 as a transition year with continued investments in capacity ramp and technology to be prepared for the upcoming turn in the cycle. However, the news suggests that chip manufacturers such as Intel, Taiwan Semiconductor, and Samsung are not rushing to upgrade their equipment in anticipation of the AI boom.

ASML's guidance for the second quarter indicated a further decline in year-over-year revenue. The company expects revenue in the range of $6.1 billion to $6.7 billion, compared to $7.3 billion in the same quarter last year. While these figures are not alarming as ASML's business tends to be cyclical, it has justified a pullback in the stock's previously soaring value.

Investors are advised to exercise caution before considering an investment in ASML. The recent report from The Motley Fool's Stock Advisor analyst team suggests that ASML is not among the top ten stocks to buy at the moment. Instead, they have identified other stocks that have the potential for substantial returns in the coming years.

ASML Holding is a key player in the semiconductor manufacturing equipment industry, and its disappointing first-quarter results have raised concerns about the impact on the broader AI boom. As the company strives to navigate the transitional period and align its technology with future demand, investors will be keeping a keen eye on ASML's future performance.

Please note that Jeremy Bowman, the writer of this article, does not hold any positions in ASML or other mentioned stocks. The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing, as well as recommending certain options related to Intel.