ASML Sees Orders Soar. Is It Time to Buy the Stock?

Core Viewpoint - ASML Holding's stock has experienced volatility but saw a rally following a strong fourth-quarter earnings report, driven by a significant increase in orders for semiconductor manufacturing devices [1][2]. Group 1: Orders and Revenue - ASML reported bookings of 7.1 billion euros ($7.4 billion) in Q4, marking a 169% increase compared to Q3 and exceeding analyst expectations of 4 billion euros ($4.2 billion) [3]. - The company anticipates revenue for 2025 to be between 30 billion to 35 billion euros ($31.1 billion to $36.3 billion), with Q1 revenue projected at 7.5 billion to 8 billion euros ($7.8 billion to $8.3 billion) [4]. - In Q4, ASML's revenue increased by 29% year over year to 9.3 billion euros ($9.7 billion), surpassing the guidance range of 8.8 billion to 9.2 billion euros ($9.1 billion to $9.6 billion) [8]. Group 2: Market Dynamics and Future Outlook - The company expects its Chinese business to normalize in 2025, with China accounting for 41% of revenue in 2024 and 29% in 2023, influenced by prior trade restrictions [6]. - ASML projects long-term revenue potential for 2030 to be between 44 billion to 60 billion euros ($45.7 billion to $62.3 billion), driven by strong chip demand and advancements in AI technology [7]. - The company is introducing a new high numerical aperture extreme ultraviolet lithography system (High NA EUV), which is expected to be a significant growth driver [2][11]. Group 3: Sales Performance - In Q4, ASML sold 119 new lithography systems and 13 used systems, compared to 113 new and 11 used systems a year ago [9]. - Equipment sales rose nearly 25% year over year to 7.1 billion euros ($7.4 billion), while service revenue surged 39% to 2.2 billion euros ($2.3 billion) [8]. Group 4: Competitive Position and Valuation - ASML holds a virtual monopoly in EUV technology, essential for producing advanced chips, particularly for AI applications [10][12]. - The stock trades at a forward price-to-earnings multiple of about 30 based on 2025 estimates, which is considered a fair valuation given its market position [12].