Key facts
- ASML, a major supplier of AI chip manufacturing equipment, is set to report quarterly earnings.
- The company's valuation has risen nearly 70% this year due to the AI boom.
- U.S. export control proposals aim to curb China's ability to make advanced chips, impacting ASML.
- ASML is forecast to report an 8.8% rise in second-quarter net profit to €2.61 billion on revenue up 14% at €8.8 billion.
- Analysts anticipate ASML's capacity may be fully booked through 2027 and its 2030 sales target could be conservative.
ASML, the world's largest supplier of equipment for manufacturing advanced chips, is preparing to report its quarterly earnings amidst strong demand driven by the AI boom. The company's share price has surged nearly 70% this year, reflecting its critical role in supplying chipmakers like TSMC, SK Hynix, Samsung, and Micron. However, ASML faces headwinds from proposed U.S. legislation that would require allies to align with export controls aimed at curbing China's access to advanced chip technology. ASML has stated it does not sell its most advanced EUV tools to China but forecasts that up to 20% of its sales this year could come from legal purchases of less-advanced DUV tools by Chinese companies for automotive and industrial products.
Analysts forecast ASML to report an 8.8% rise in second-quarter net profit to €2.61 billion on revenue up 14% at €8.8 billion. There is anticipation that ASML will raise its full-year revenue forecast, currently between €36 billion and €40 billion, with some analysts suggesting its capacity may already be booked through 2027 and its 2030 sales target of at least €44 billion could be conservative, with projections reaching €60 billion. ASML aims to ship 60 EUV tools this year and 80 next year, with potential to produce up to 110. The company is actively working to avoid becoming an industry bottleneck by exploring 'creative ways' to meet customer demand, including upgrades to older tools and faster assembly, and has secured extra supplies of critical components from suppliers like Zeiss and Trumpf.
Despite the positive outlook on demand and capacity, some analysts caution that ASML's valuation, trading at 49 times estimated 2027 earnings, may be stretched. Others believe there is still room for growth, particularly if ASML delivers strong results and further capacity expansion, potentially allowing it to catch up to the performance of the Philadelphia Semiconductor Index.