ASML investors should focus solely on the long-term outlook.ASML (ASML -0.62%) dealt with a slew of bad news when it announced its financial results for the second quarter of 2024. The maker of semiconductor manufacturing equipment faces declining revenue even as customers demand more of the world's advanced chips.That's because restrictions on equipment sales to China reduce its revenue potential. Additionally, rhetoric from presidential candidate Donald Trump suggesting Taiwan may have to pay the U.S. for ...

Radionphoto/iStock via Getty ImagesForeword This article is based on the July 15 Barron’s Weekly article aimed at revealing 48 select stocks for the Mid-Year 2024. That article was: By Lauren R. Rublin July 12, 2024, 11:48 am EDT “You can never be too rich, but can you be too thin? That’s just what many investors have wondered about the current bull market’s exceedingly narrow foundation, composed of just a handful of mega cap tech stocks leading the artificial-intelligence revolution. Their concerns we ...

Investment Rating - The industry rating is "Recommend" and remains unchanged [4] Core Views - ASML's Q2 2024 performance exceeded guidance, driven by strong demand in the semiconductor industry, particularly from AI-related sectors [1][2] - The company expects stronger performance in H2 2024 compared to H1, with the semiconductor industry continuing to recover from the downturn [2][18] - AI, energy transition, and electrification are identified as long-term growth drivers, with the industry expected to enter an upward cycle in 2025 [2][18] Performance Summary Overall Performance - Q2 2024 revenue reached €6.243 billion (QoQ +18.01%, YoY -9.55%), slightly above the guidance range of €5.7-6.2 billion [8] - Gross margin was 51.5% (QoQ +0.5pct, YoY +0.2pct), exceeding the guidance of 50-51% [8] - Equipment sales contributed €4.8 billion, while installed base management revenue was €1.48 billion, slightly above the guidance of €1.4 billion [8] Order and Shipment Details - Q2 2024 equipment orders totaled €5.567 billion, with EUV orders at €2.5 billion and non-EUV orders at €3.1 billion [11] - 73% of orders came from logic customers, while 27% were from memory customers [11] - The company delivered 8 EUV systems in Q2 2024 [11] Revenue Breakdown - Equipment sales in Q2 2024 were €4.761 billion (QoQ +20.05%, YoY -15.08%), with ArFi and EUV technologies contributing 50% and 31% respectively [14] - By region, 49% of revenue came from Mainland China, 28% from South Korea, and 11% from Taiwan [14] - A total of 100 lithography systems were sold in Q2 2024, including 8 EUV systems and 32 ArFi systems [14] Company Guidance Q3 2024 Guidance - Expected Q3 2024 revenue is between €6.7-7.3 billion, with installed base management revenue around €1.4 billion [16] - Gross margin is projected to be 50-51% [16] Full-Year 2024 Guidance - Total revenue for 2024 is expected to be similar to 2023, with a slightly lower gross margin [16] - The company anticipates H2 2024 performance to be significantly stronger than H1, driven by the semiconductor industry's recovery [18] Demand and Supply Outlook Demand Outlook - Logic customers are still digesting the capacity added over the past year, with demand slightly lower than 2023 [18] - Memory customer demand is expected to grow compared to 2023, driven by DRAM technology upgrades such as DDR5 and HBM [18] - AI is identified as the primary driver of semiconductor industry recovery, with strong demand expected to continue into 2025 and 2026 [22][35] Supply Outlook - The company delivered a new batch of NXE:3800E systems in Q2 2024 and is increasing production capacity as planned [19] - Most shipments in H2 2024 will be 3800E systems, with the second High NA EUV system delivered in Q2 2024 [19] - The company aims to achieve a production capacity of 600 DUV and 90 EUV systems, with a medium-term goal of producing 20 High NA EUV systems [25] Key Highlights from Earnings Call Order Composition and Future Outlook - 73% of Q2 2024 orders were related to logic, with no High NA EUV orders in the quarter [20] - The company maintains its 2025 revenue assumption of €30-40 billion [20] Impact of Export Controls - The company continues to see strong demand from Mainland China for mature semiconductor processes [21] - Export controls have not significantly impacted the company's operations, and it remains compliant with US and Dutch regulations [21][27] High NA EUV and AI-Driven Demand - High NA EUV systems are priced at over €350 million each, with strong customer interest and initial data meeting expectations [26][34] - AI is driving demand for both logic and memory, with HBM contributing to increased wafer demand [22][35] Capacity and Revenue Growth - The company expects Q4 2024 revenue to exceed €9 billion, driven by deferred revenue from 3800E systems and strong demand growth [29] - The company is on track to achieve its production capacity goals, with High NA EUV systems expected to contribute significantly in 2025 [25][37]

ASML TodayASMLASML$929.94 +34.57 (+3.86%) 52-Week Range$563.99▼$1,110.09Dividend Yield0.68%P/E Ratio47.49Price Target$1,147.80Add to WatchlistASML Holding N.V. NASDAQ: ASML designs and manufactures extreme ultraviolet (EUV) lithography machines that use light to precision print microscopic patterns on silicon wafers. These gigantic 330,000-pound machines are used to mass-produce the world’s computer chips. ASML is often the barometer of the health of the semiconductor industry. Their lithography machines mu ...

Pixelbizz/iStock Editorial via Getty Images Investment thesis ASML (NASDAQ:ASML) had from the start projected 2024 to be a flat year, before growth would resume in 2025, based on several catalysts such as higher semiconductor industry growth, fab buildouts, and the introduction of new, pricier low- as well as high-NA EUV lithography tools. Since the valuation has remained reflective of a growth stock, with no major sell-offs, this meant ASML has been a stock for the patient this year. With the financial ...

This semiconductor testing equipment maker has a lot of upside potential.ASML (ASML -3.11%) is one of the world's most important semiconductor equipment companies. It's the largest producer of lithography systems, which are used to optically etch circuit patterns onto silicon wafers. It's also the only supplier of high-end extreme ultraviolet (EUV) lithography systems for producing the world's smallest and densest chips.ASML's monopolization of that crucial technology enabled it to increase revenue at a com ...

Fears of how additional semiconductor sector trade restrictions might impact the company could be overblown.Share prices of ASML (ASML -3.11%) sank this week after it delivered its second-quarter report, even though its bookings surged in the period. The stock is still up about 25% year to date.The Dutch semiconductor equipment manufacturer is currently in the midst of what it has described as a transition year as it introduces its newest technology, a high numerical aperture extreme ultraviolet lithography ...

Can this semiconductor equipment giant come out of its latest slump and become a winner over the next five years?ASML Holding (ASML -3.11%) is a critical player in the semiconductor industry, as chipmakers and foundries use its equipment to manufacture chips. That explains why the Dutch semiconductor equipment giant has clocked impressive gains on the stock market in the past five years. The robust demand for ASML's chipmaking equipment to fulfill the growing need for semiconductors has led to a nice jump i ...

With stock market volatility returning for the hottest days of summer, investors may be pondering whether it’s too late to rotate into some of the still-cheap growth stocks. Especially those that didn’t really participate in the first-half market rally.The mid-cap surge came fast and furiously. Though the cap rotation may still have a ways to go, the easy money, as they say, has likely already been made.In any case, staying diversified is key to steering clear of ugly sector and theme-specific sell-offs. Th ...

Semiconductors continue to have outsized importance in the modern world. Microchips and processors power everything from our refrigerators and cars to our smartphones and computers. Increasingly important, they power artificial intelligence (AI) applications and models. Semiconductors have become so vital that they are often referred to as the “oil of the 21st Century.”According to Fortune Business Insights, the global semiconductor market was worth $611.35 billion in 2023 and is projected to grow to $2.06 ...