If You Only Invest In an S&P 500 Index Fund, You're Missing Out on This Unparalleled Semiconductor Stock

Core Viewpoint - ASML is a crucial player in the artificial intelligence (AI) sector, providing essential machinery for semiconductor manufacturing, yet it is not included in the S&P 500 index, which may lead investors to overlook its potential [1][4]. Group 1: Company Overview - ASML specializes in selling semiconductor lithography machines, particularly deep ultraviolet (DUV) and extreme ultraviolet (EUV) machines, which are vital for producing advanced AI chips [5]. - ASML is the sole producer of EUV machines, necessary for creating the most powerful and energy-efficient chips, which are critical for large tech companies developing AI technologies [6]. Group 2: Market Outlook - The long-term outlook for ASML is robust, with management projecting semiconductor sales for data centers to reach $350 billion by 2030, contributing to an overall semiconductor market expected to exceed$1 trillion, reflecting a 9% average annual growth rate through the decade [7]. - ASML is anticipated to grow faster than the overall semiconductor market due to its lack of competition and established relationships with major foundries, which are expected to remain stable for the foreseeable future [8]. Group 3: Financial Performance - ASML's revenue guidance for 2025 has been narrowed to between €30 billion and €35 billion ($31.1 billion to$36.3 billion), which is at the lower end of previous expectations, alongside a reduction in gross margin expectations to 51% to 53% [10]. - Despite recent challenges, ASML is viewed as a potential bargain for long-term investors, with expected low double-digit revenue growth and significant operating profit growth projected to reach €22.1 billion ($22.9 billion) by 2030, representing a compound annual growth rate of approximately 17% [12]. Group 4: Investment Consideration - ASML shares currently trade at around 30 times analysts' consensus earnings estimates for 2025, which may seem high given the low expectations, but long-term potential suggests a higher intrinsic value [13]. - ASML could be a valuable addition to any investment portfolio, even for those not focused on index investing, due to its strategic position in the semiconductor industry [14].