ASML's Critical Role in the AI Supply Chain
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy ASML?
Source: Fool
- Market Demand Growth: ASML's quarterly revenue rose 13% year-over-year to $8.7 billion, indicating sustained demand for AI infrastructure, with over $2.5 trillion expected to be invested in AI infrastructure over the next few years, further boosting the company's performance.
- Technological Monopoly Advantage: ASML has nearly monopolized the extreme ultraviolet (EUV) equipment market, becoming a critical supplier for companies like TSMC and Micron in manufacturing advanced AI processors, ensuring its dominant position in chip manufacturing.
- Profitability Improvement: With a gross margin of 52.6%, ASML's forward P/E ratio stands at 32, while projected annual earnings growth is 23%, resulting in a PEG ratio of only 1.4, highlighting the investment value and potential upside of its stock.
- Future Growth Potential: As customers increase their expectations for short- and medium-term product demand, ASML is well-positioned for further growth, especially as chip demand outpaces supply, with clients accelerating expansion plans that will bring more orders to the company.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy ASML?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on ASML
Wall Street analysts forecast ASML stock price to fall
12 Analyst Rating
12 Buy
0 Hold
0 Sell
Strong Buy
Current: 1584.510
Low
1385
Averages
1583
High
1911
Current: 1584.510
Low
1385
Averages
1583
High
1911
About ASML
ASML Holding N.V. is a holding company based in the Netherlands. The Company operates through its subsidiaries in the Netherlands, the United States, Italy, France, Germany, the United Kingdom, Ireland, Belgium, South Korea, Taiwan, Singapore, China, Hong Kong, Japan, Malaysia and Israel. The Company operates through one business segment which is engage in development, production, marketing, sales, upgrading and servicing of advanced semiconductor equipment systems, consisting of lithography, metrology and inspection systems. The Company offers TWINSCAN systems, equipped with lithography system with a mercury lamp as light source (i-line), Krypton Fluoride (KrF) and Argon Fluoride (ArF) light sources for processing wafers for manufacturing environments for which imaging at a small resolution is required. TWINSCAN systems also include immersion lithography systems (TWINSCAN immersion systems).
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Semiconductor Stocks Decline, Figma and Magnum Ice Cream Surge
- Applied Materials Earnings Beat: Despite reporting fiscal second-quarter earnings of $2.86 per share and revenues of $7.91 billion, both exceeding analyst expectations, Applied Materials' stock fell about 2%, indicating market concerns about the semiconductor sector's outlook.
- Semiconductor Sector Decline: The iShares Semiconductor ETF is poised to end a six-week winning streak, with Marvell and Intel both down 4%, while ASML and Arm dropped over 3.5%, reflecting diminished investor confidence in the industry.
- Figma Stock Surge: Figma's first-quarter earnings of 10 cents per share on revenues of $333 million surpassed analyst expectations of 6 cents and $313 million, leading to a nearly 9% increase in stock price, showcasing strong market demand for its services.
- Magnum Ice Cream Acquisition Interest: Magnum Ice Cream shares jumped over 17% following reports that firms like Blackstone and CD&R are considering a bid, with potential buyers waiting for summer sales data before proceeding, indicating optimism about the company's growth prospects.
See More
European Stock Markets Rise on Thursday
- Market Uptrend: On Thursday, European stock markets broadly rose, driven by media reports, reflecting investor optimism about economic recovery, which may attract more capital inflows into the market.
- Increased Investor Confidence: As the market rises, investor confidence has improved, potentially leading to increased trading activity that could further propel the upward trend in stock prices.
- Economic Data Impact: The market rebound may be linked to recently released economic data indicating signs of recovery, enhancing market expectations for future growth.
- Sector Performance Divergence: While the overall market is up, performance varies across sectors, with industries such as technology and consumer goods showing strong results, indicating investor preference for specific sectors.
See More
Trump-Xi Talks: Market Implications for Key Sectors
- Trade Agreement Potential: Trump's discussions with Xi are expected to cover procurement commitments in agriculture, aerospace, and energy, with analysts suggesting that if agreements are reached, related stocks, particularly Boeing and agricultural exporters, could see a boost.
- Boeing Order Outlook: Boeing could emerge as the summit's biggest beneficiary, with expectations of a commitment from China to purchase about 500 aircraft, marking the first major order in nearly a decade and significantly improving Boeing's market outlook.
- Semiconductor Industry Sensitivity: Semiconductor stocks are highly sensitive to signals of eased export restrictions from the Trump-Xi talks, with analysts suggesting that a compromise could benefit companies like ASML, leading to increased market forecasts.
- Electric Vehicle Market Focus: Electric vehicle and battery stocks are under close scrutiny, with Morgan Stanley reiterating its positive outlook on Contemporary Amperex Technology, suggesting that its partnership with Ford could serve as a blueprint for future U.S.-China industrial cooperation.
See More
ASML's Critical Role in the AI Supply Chain
- Market Demand Growth: ASML's quarterly revenue rose 13% year-over-year to $8.7 billion, indicating sustained demand for AI infrastructure, with over $2.5 trillion expected to be invested in AI infrastructure over the next few years, further boosting the company's performance.
- Technological Monopoly Advantage: ASML has nearly monopolized the extreme ultraviolet (EUV) equipment market, becoming a critical supplier for companies like TSMC and Micron in manufacturing advanced AI processors, ensuring its dominant position in chip manufacturing.
- Profitability Improvement: With a gross margin of 52.6%, ASML's forward P/E ratio stands at 32, while projected annual earnings growth is 23%, resulting in a PEG ratio of only 1.4, highlighting the investment value and potential upside of its stock.
- Future Growth Potential: As customers increase their expectations for short- and medium-term product demand, ASML is well-positioned for further growth, especially as chip demand outpaces supply, with clients accelerating expansion plans that will bring more orders to the company.
See More
China Pushes Back Against US Chipmaker Restrictions
- Legislation Context: The proposed MATCH Act by the U.S. aims to restrict Chinese chipmakers' competitiveness in the AI sector, likely to be discussed during the Trump-Xi meeting, highlighting Beijing's concerns over U.S. tech export policies.
- Chinese Response: Chinese officials have publicly criticized the bill and prepared countermeasures, summoning U.S. diplomats to express dissatisfaction, indicating escalating tensions in U.S.-China tech relations.
- Ministry of Commerce Involvement: Last month, China's Ministry of Commerce convened U.S. chip industry representatives in Washington to discuss semiconductor issues related to the MATCH Act, demonstrating China's vigilance regarding U.S. legislative movements.
- Legal Countermeasures: China has issued a decree that could place individuals promoting or implementing improper foreign measures on a
See More
EU Aims to Join US-Led Supply Chain Initiative
- Supply Chain Security Collaboration: The EU is exploring joining the US-led Pax Silica alliance to secure supply chains for semiconductors and AI, highlighting the bloc's focus on diversifying supply chains amid intensifying competition with China.
- Member Participation: Since its launch in December last year, the Pax Silica alliance has seen multiple countries, including Australia, Finland, and Sweden, sign on, and EU participation would help avoid fragmentation and enhance overall competitiveness.
- High-Level Communication Plans: The European Commission plans to send a senior official to the US in the coming weeks to discuss joining conditions with major member states like France, aiming to better coordinate the EU's role in global supply chains.
- Trade Agreement Progress: Amid deepening cooperation with the US, the EU is advancing the implementation of a trade deal reached last July and drafting Chips Act II to allow direct investment in semiconductor manufacturing, further strengthening its competitiveness in critical raw materials.
See More
Semiconductor Stocks Decline, Figma and Magnum Ice Cream Surge
- Applied Materials Earnings Beat: Despite reporting fiscal second-quarter earnings of $2.86 per share and revenues of $7.91 billion, both exceeding analyst expectations, Applied Materials' stock fell about 2%, indicating market concerns about the semiconductor sector's outlook.
- Semiconductor Sector Decline: The iShares Semiconductor ETF is poised to end a six-week winning streak, with Marvell and Intel both down 4%, while ASML and Arm dropped over 3.5%, reflecting diminished investor confidence in the industry.
- Figma Stock Surge: Figma's first-quarter earnings of 10 cents per share on revenues of $333 million surpassed analyst expectations of 6 cents and $313 million, leading to a nearly 9% increase in stock price, showcasing strong market demand for its services.
- Magnum Ice Cream Acquisition Interest: Magnum Ice Cream shares jumped over 17% following reports that firms like Blackstone and CD&R are considering a bid, with potential buyers waiting for summer sales data before proceeding, indicating optimism about the company's growth prospects.
See More
European Stock Markets Rise on Thursday
- Market Uptrend: On Thursday, European stock markets broadly rose, driven by media reports, reflecting investor optimism about economic recovery, which may attract more capital inflows into the market.
- Increased Investor Confidence: As the market rises, investor confidence has improved, potentially leading to increased trading activity that could further propel the upward trend in stock prices.
- Economic Data Impact: The market rebound may be linked to recently released economic data indicating signs of recovery, enhancing market expectations for future growth.
- Sector Performance Divergence: While the overall market is up, performance varies across sectors, with industries such as technology and consumer goods showing strong results, indicating investor preference for specific sectors.
See More
Trump-Xi Talks: Market Implications for Key Sectors
- Trade Agreement Potential: Trump's discussions with Xi are expected to cover procurement commitments in agriculture, aerospace, and energy, with analysts suggesting that if agreements are reached, related stocks, particularly Boeing and agricultural exporters, could see a boost.
- Boeing Order Outlook: Boeing could emerge as the summit's biggest beneficiary, with expectations of a commitment from China to purchase about 500 aircraft, marking the first major order in nearly a decade and significantly improving Boeing's market outlook.
- Semiconductor Industry Sensitivity: Semiconductor stocks are highly sensitive to signals of eased export restrictions from the Trump-Xi talks, with analysts suggesting that a compromise could benefit companies like ASML, leading to increased market forecasts.
- Electric Vehicle Market Focus: Electric vehicle and battery stocks are under close scrutiny, with Morgan Stanley reiterating its positive outlook on Contemporary Amperex Technology, suggesting that its partnership with Ford could serve as a blueprint for future U.S.-China industrial cooperation.
See More
ASML's Critical Role in the AI Supply Chain
- Market Demand Growth: ASML's quarterly revenue rose 13% year-over-year to $8.7 billion, indicating sustained demand for AI infrastructure, with over $2.5 trillion expected to be invested in AI infrastructure over the next few years, further boosting the company's performance.
- Technological Monopoly Advantage: ASML has nearly monopolized the extreme ultraviolet (EUV) equipment market, becoming a critical supplier for companies like TSMC and Micron in manufacturing advanced AI processors, ensuring its dominant position in chip manufacturing.
- Profitability Improvement: With a gross margin of 52.6%, ASML's forward P/E ratio stands at 32, while projected annual earnings growth is 23%, resulting in a PEG ratio of only 1.4, highlighting the investment value and potential upside of its stock.
- Future Growth Potential: As customers increase their expectations for short- and medium-term product demand, ASML is well-positioned for further growth, especially as chip demand outpaces supply, with clients accelerating expansion plans that will bring more orders to the company.
See More
China Pushes Back Against US Chipmaker Restrictions
- Legislation Context: The proposed MATCH Act by the U.S. aims to restrict Chinese chipmakers' competitiveness in the AI sector, likely to be discussed during the Trump-Xi meeting, highlighting Beijing's concerns over U.S. tech export policies.
- Chinese Response: Chinese officials have publicly criticized the bill and prepared countermeasures, summoning U.S. diplomats to express dissatisfaction, indicating escalating tensions in U.S.-China tech relations.
- Ministry of Commerce Involvement: Last month, China's Ministry of Commerce convened U.S. chip industry representatives in Washington to discuss semiconductor issues related to the MATCH Act, demonstrating China's vigilance regarding U.S. legislative movements.
- Legal Countermeasures: China has issued a decree that could place individuals promoting or implementing improper foreign measures on a
See More
EU Aims to Join US-Led Supply Chain Initiative
- Supply Chain Security Collaboration: The EU is exploring joining the US-led Pax Silica alliance to secure supply chains for semiconductors and AI, highlighting the bloc's focus on diversifying supply chains amid intensifying competition with China.
- Member Participation: Since its launch in December last year, the Pax Silica alliance has seen multiple countries, including Australia, Finland, and Sweden, sign on, and EU participation would help avoid fragmentation and enhance overall competitiveness.
- High-Level Communication Plans: The European Commission plans to send a senior official to the US in the coming weeks to discuss joining conditions with major member states like France, aiming to better coordinate the EU's role in global supply chains.
- Trade Agreement Progress: Amid deepening cooperation with the US, the EU is advancing the implementation of a trade deal reached last July and drafting Chips Act II to allow direct investment in semiconductor manufacturing, further strengthening its competitiveness in critical raw materials.
See More
