ASML Holding (ASML) Gains 13.9% YTD: What Should You Do Now?

Core Viewpoint - ASML Holding's shares have increased by 13.9% year to date, lagging behind the industry's 16.8% and the Zacks Computer & Technology sector's 17.2% growth, amidst a challenging macroeconomic environment [1] Company Performance - The company's resilience is attributed to its comprehensive product portfolio aligned with customer roadmaps, enabling cost-effective solutions for various applications [1] - ASML's investments, expanding position in the memory market, and increasing design wins are positive indicators for the company [1] - Increased pricing pressure from competitors like Lam Research and Applied Materials poses a risk for ASML [1] Industry Trends - The semiconductor industry is expected to recover in the second half of 2024, driven by the proliferation of artificial intelligence (AI) and advanced digital infrastructure needs [3] - Improving wafer fabrication equipment spending is a significant positive for ASML [3] - Demand for advanced nodes, particularly for 5G, AI, and high-performance computing, is increasing, benefiting ASML's product demand [3][4] Long-Term Growth Factors - ASML is making substantial investments in capacity ramp-up and technology innovation to capitalize on industry trends [5] - The company anticipates growth in memory revenues for 2024, driven by DRAM technology node transitions [5] - ASML's net system bookings in Q2 2024 reached EUR 5.6 billion, with EUR 2.5 billion from EUV bookings, indicating strong demand [5] Revenue and Earnings Estimates - The Zacks Consensus Estimate for ASML's 2024 revenues is $30.18 billion, reflecting a year-over-year growth of 1.3% [7] - The consensus estimate for 2024 earnings is $20.30, indicating a year-over-year decline of 5.7%, but has been revised upward by 0.9% in the past 30 days [7] Market Position and Valuation - ASML is well-positioned to benefit from AI proliferation and global electronics industry trends, enhancing its long-term prospects [7] - The company is currently trading at a forward 12-month P/E of 32.68X, compared to the industry's 27.27X, indicating a stretched valuation [9]