ASML On Wednesday, it raised its forecast for the second time this year and reported better-than-expected quarterly results as its customers continue to ramp up production of AI chips.
The Dutch semiconductor equipment maker said it now expects annual revenue of between 43 billion euros ($49 billion) and 45 billion euros, and a gross margin of between 54 and 56 percent. It previously forecast annual net sales of between 36 and 40 billion euros and a gross margin of between 51 and 53%.
The stock jumped more than 7% at market open before paring its gains slightly to rise 4.4% in the final session. Stocks have surged 115% this year.
Here are ASML’s results compared to LSEG consensus estimates for the second quarter:
Net turnover: 9.3 billion euros versus 8.8 billion euros expectedNet profit: 2.9 billion euros versus 2.6 billion euros expectedASML – Europe’s most valuable company – is the only company in the world manufacturing extreme ultraviolet (EUV) lithography machines used to produce the most advanced semiconductors.
CEO Christophe Fouquet said order intake remained “extremely strong” in the first half. This momentum means the company will aim to add 30% to its low NA EUV immersion capacity in 2026 and 30% to its deep ultraviolet (DUV) immersion capacity in 2026, he said.
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ASML shares this year.
Chip expansion pushASML already had raised its guidelines last quarter due to continued demand for its high-end EUV machines. This figure is expected to remain high as chipmakers increase production capacity to meet the needs of the AI boom.
The company’s customers continue to “accelerate their capacity expansion plans,” CEO Fouquet said in a statement Wednesday. “This translates into customer engagements across our entire product portfolio, providing ASML with increased visibility into long-term demand. »
“ASML is doing a great job of bringing that capability, and the company has several levers to get there,” Javier Correonero, senior equity analyst at Morningstar, told CNBC. Ritika Gupta. He said the company was increasing production by optimizing the “clean room” space it has in Veldhoven, where it produces the DUV and EUV machines, while also carrying out so-called “rapid shipments”.
Earlier this week, Taiwan Semiconductor Manufacturing Company (TSMC), one of ASML’s largest customers, reported a 68% jump in June, thanks to strong demand for its chips.
TSMC plans to add two advanced chip packaging factories in Chiayi Science Park in southern Taiwan, Reuters reportedciting remarks made by Taiwan’s National Science and Technology Council Minister Wu Cheng-wen on Sunday.
UBS analysts said in a July 10 note that expanding semiconductor manufacturing facilities, along with AI-driven demand for cutting-edge chip production, should help ASML experience a stronger second half.
Sales in ChinaDespite robust demand, semiconductor stocks are under pressure as investors question whether the huge capital spending on AI can be sustained. ASML also faces tighter restrictions on export controls for its advanced chip equipment.
The stock collapsed 6% in April after a bipartisan group of U.S. lawmakers proposed a bill This would interrupt ASML’s sale of DUV machines to Chinese chip companies and impact its already declining sales in that country. This law must still progress through the American legislative process.
But the restrictions can have a counterintuitive effect, Morningstar’s Correonero said, and have already led to a boom in demand as Chinese customers stock up on machines in anticipation of further restrictions. He emphasized that although ASML is a well-run company, expectations are quite high.
“There are a lot of factors being factored in and we see them slightly overvalued,” the analyst said. “Just to give you an idea, ASML is currently trading at a forward PE of around 50x, which is in line with the spikes we saw during the Covid era… Our valuation for ASML instead implies a forward PE of 35-40x, which we view as more recent.”
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ASML said Wednesday that it continues to expect China to account for about 20% of its total net revenue for the year.
“The Chinese market is moving in line with the general behavior we see globally,” Chief Financial Officer Roger Dassen said in a transcript of a video interview.
The company said it would provide an update on its long-term targets at a capital markets day on June 10 next year.
— CNBC’s Arjun Kharpal contributed to this story.
