Latest news with #lithography
Yahoo
2 days ago
- Business
- Yahoo
This Artificial Intelligence Stock Plays an Important Role in Chip Production, but It's Down 14% in 12 Months. Could It Be a Bargain Buy?
Key Points ASML has a strong competitive moat that could position it for long-term growth. The company is projecting 15% growth this year, although management is cautious about next year. The stock is trading at a relatively modest price-to-earnings ratio of 25. These 10 stocks could mint the next wave of millionaires › The demand for artificial intelligence (AI) products and services remains strong. Tech companies have reported earnings recently, and they still remain committed to investing heavily in AI, in an effort to grow their businesses and take advantage of next-gen technologies. You might be tempted to invest in leading AI chipmaker Nvidia and other highly valued stocks to capitalize on these growth opportunities, but there may potentially be a better, more underrated option available. One stock that's been sliding over the past year but that is critical in AI chip development is ASML (NASDAQ: ASML). It may be one of the best buys out there right now. ASML's key role in chipmaking Dutch-based ASML makes photolithography machines. They are integral in chipmaking because they are necessary to etch patterns on silicon wafers. The company doesn't have any direct competition for its extreme ultraviolet lithography machines, which are used in creating the most advanced chips. The sophisticated machines give the business a strong competitive moat, which can put ASML in a great position to benefit from strong and continued demand in the AI chip market. In the company's most recent quarter, which ended on June 29, ASML reported net sales totaling 7.7 billion euros ($8.9 billion), which rose 23% year over year. Net income totaling 2.3 billion euros ($2.7 billion) increased by more than 45%. For the full year, the company is projecting 15% revenue growth and for its gross profit margin to be around 52%. ASML CEO Christophe Fouquet, however, remains cautious about the following year. "Looking at 2026, we see that our AI customers' fundamentals remain strong. At the same time, we continue to see increasing uncertainty driven by macro-economic and geopolitical developments." That uncertainty may be a reason why investors haven't been all that eager to buy the AI stock this year. The stock is trading well below normal levels Over the past 12 months, shares of ASML are down 15%. The stock has been underperforming the market this year and it's trading at a modest price-to-earnings multiple of just 25 -- that's right in line with the S&P 500 average. Investors, however, are often paying far higher multiples for big players in AI. Nvidia, for instance, trades at nearly 60 times earnings. Tariffs and global economic uncertainty may be the biggest factors that are weighing down ASML's stock of late. If the company were based in the U.S., I think its valuation would likely be far higher than it is right now. But that certainly isn't a reason to shy away from it. According to the consensus analyst price target of nearly $924, the stock could have near-term upside of more than 33%. In the long run, it may rise even higher given the persistent demand for cutting-edge chips. Is ASML a no-brainer buy right now? ASML is a stock that looks like a fantastic buy, perhaps even a no-brainer investment at this point. Between its strong moat, fantastic margins, promising long-term growth, and relatively modest valuation, it checks all the important boxes that long-term investors might look for in a business. Even if the short term is hazy due to macroeconomic conditions, strong demand for all things related to AI suggests that ASML is going to be busy for a long time. It's a stock that I could see going a whole lot higher given its terrific fundamentals, which is why I wouldn't hesitate to buy it for the long haul. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $462,306!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,522!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $619,036!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of August 4, 2025 David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML and Nvidia. The Motley Fool has a disclosure policy. This Artificial Intelligence Stock Plays an Important Role in Chip Production, but It's Down 14% in 12 Months. Could It Be a Bargain Buy? was originally published by The Motley Fool
Yahoo
2 days ago
- Business
- Yahoo
Is ASML a Buy?
Key Points ASML recently gave a cautious outlook for next year. The stock trades at a multiyear low valuation. A monopoly company at an historically low valuation seems like a good pickup. These 10 stocks could mint the next wave of millionaires › Even though it has a monopoly on critical technology and the artificial intelligence revolution in full swing, ASML Holdings (NASDAQ: ASML) has lagged both the index and the iShares Semiconductor ETF (NASDAQ: SOXX) year to date, as well as over the past one, three, and five years. This is kind of an amazing statistic, given ASML's monopoly on extreme ultraviolent lithography (EUV), which is needed to produce semiconductors below the 7 nanometer (nm) node. 7nm chips began to be produced in 2019, and the industry has progressed to 2nm chips, which will arrive by the end of this year. Furthermore, all the leading DRAM memory producers are just now adopting EUV, and DRAM demand is exploding because of the memory needs of AI systems. Of course, ASML has been known to have this monopoly for a while and entered the past five years at a higher valuation than peers. Yet the stock's underperformance has changed that, and shares now look like somewhat of a bargain, at least by growth stock standards. ASML is at a decade-long discount After its recent post-earnings selloff, ASML now trades at roughly 25 times earnings. That valuation doesn't scream "cheap" on the surface. But again, ASML is an extraordinary company, and that valuation is the cheapest it has been over the past 10 years, with a few exceptions. Much of the recent selloff has to do with near-term concerns over the 2026 growth outlook. On ASML's recent earnings release, management said that while the company is still preparing for a growth year next year, it wasn't guaranteeing it. That was a change from last quarter, when ASML said it was expecting a growth year in 2026, after a strong midteens growth expectation this year. Management spoke of the overhang of tariffs, which could have both direct and indirect impacts. Tariffs may directly slow the several of ASML's end markets, as those end products are still mostly assembled in East Asia. There is also the question of Section 232 tariffs on semiconductors, which have not yet been announced. Should semiconductors get tariffed specifcally, many important chips could be directly affected, given the importance of Taiwan Semiconductor Manufacturing (NYSE: TSM) in the electronics supply chain. There are also indirect impacts on the wider economy, which could also depress overall demand. Although chips tend to have la strong long-term growth outlook, it's still a very cyclical business at times. Last Friday, we perhaps saw the first signs of tariffs' impacts on the economy, as job creation for July came in well below target, while the stronger readings from May and June were also revised down. The big innovation in chips today doesn't have to do with lithography Another part of ASML's valuation compression may have to do with the technology of chipmaking itself. Major chipmakers are now switching from finFET transistors, with the gate surrounding three sides of the transistor source, to gate-all-around transistors, in which the gate encircles the source on all four sides. This architecture also allows transistor sources to be stacked on top of each other in vertical fashion. In addition, another innovation going on right now is backside power, in which the power controls of the chip are being built on the back side of the silicon and connected through the silicon surface to the front. This frees up more space on the front of the chip, allowing greater transistor counts and performance. Lithography, which is what ASML does, has to do with shrinking transistors down to smaller and smaller sizes so that more can fit on a given piece of silicon. However, the enabling technologies of GAA and backside power have more to do with other areas of manufacturing technology, such as etch and deposition, novel packaging and wafer thinning, and increased metrology. This could be why other major semicap equipment stocks in etch, deposition, and metrology have seen their valuations go up, as ASML's valuation has come back down toward them: But near-termism has created an opportunity While the picture for 2026 and maybe the next couple of years are a bit murky for ASML, the long-term growth opportunity appears intact, as does ASML's competitive advantage in lithography. Countering the worries about a near-term slowdown in lithography intensity, ASML CEO Christophe Fouquet noted: So I think that after the 1.4 nanometer node, we will see again some litho intensity increase some more EUV layers. If you look at the long term also there, the Logic customers are extremely bullish about the need for more EUV layers. So yes, there is one node as it happened before with FinFET, where there's a bit of a pause. But I always explain the only reason for that pause is to enable more shrink moving forward. So for every node where you pause basically to change your transistor architecture, usually, you will see 3, 4, 5 nodes where you continue basically to shrink and there drive more litho intensity. Basically, the 2nm node may not see an increase in litho intensity as chipmakers focus on getting the new transistor and backside power right, but lithography intensity and shrink should still continue beyond that point into the future. On that note, ASML kept its 2030 revenue range outlook between 44 billion to 60 billion euros intact. That's relative to the 32.2 billion euros ASML has made over the past 12 months. In that scenario, ASML should be making between 14 billion and 23 billion euros in net profit by 2030, relative to its 230 billion Euro market cap today. Given ASML's technology moat and the strong long-term picture for advanced semiconductors and memory, that a seems like a very solid value for investors looking beyond the next year. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $462,306!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $38,522!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $619,036!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join , and there may not be another chance like this anytime soon.*Stock Advisor returns as of August 4, 2025 Billy Duberstein and/or his clients have positions in ASML and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Taiwan Semiconductor Manufacturing, and iShares Trust-iShares Semiconductor ETF. The Motley Fool has a disclosure policy. Is ASML a Buy? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
3 days ago
- Business
- Globe and Mail
This Artificial Intelligence Stock Plays an Important Role in Chip Production, but It's Down 14% in 12 Months. Could It Be a Bargain Buy?
Key Points ASML has a strong competitive moat that could position it for long-term growth. The company is projecting 15% growth this year, although management is cautious about next year. The stock is trading at a relatively modest price-to-earnings ratio of 25. These 10 stocks could mint the next wave of millionaires › The demand for artificial intelligence (AI) products and services remains strong. Tech companies have reported earnings recently, and they still remain committed to investing heavily in AI, in an effort to grow their businesses and take advantage of next-gen technologies. You might be tempted to invest in leading AI chipmaker Nvidia and other highly valued stocks to capitalize on these growth opportunities, but there may potentially be a better, more underrated option available. One stock that's been sliding over the past year but that is critical in AI chip development is ASML (NASDAQ: ASML). It may be one of the best buys out there right now. ASML's key role in chipmaking Dutch-based ASML makes photolithography machines. They are integral in chipmaking because they are necessary to etch patterns on silicon wafers. The company doesn't have any direct competition for its extreme ultraviolet lithography machines, which are used in creating the most advanced chips. The sophisticated machines give the business a strong competitive moat, which can put ASML in a great position to benefit from strong and continued demand in the AI chip market. In the company's most recent quarter, which ended on June 29, ASML reported net sales totaling 7.7 billion euros ($8.9 billion), which rose 23% year over year. Net income totaling 2.3 billion euros ($2.7 billion) increased by more than 45%. For the full year, the company is projecting 15% revenue growth and for its gross profit margin to be around 52%. ASML CEO Christophe Fouquet, however, remains cautious about the following year. "Looking at 2026, we see that our AI customers' fundamentals remain strong. At the same time, we continue to see increasing uncertainty driven by macro-economic and geopolitical developments." That uncertainty may be a reason why investors haven't been all that eager to buy the AI stock this year. The stock is trading well below normal levels Over the past 12 months, shares of ASML are down 15%. The stock has been underperforming the market this year and it's trading at a modest price-to-earnings multiple of just 25 -- that's right in line with the S&P 500 average. Investors, however, are often paying far higher multiples for big players in AI. Nvidia, for instance, trades at nearly 60 times earnings. ASML PE Ratio data by YCharts Tariffs and global economic uncertainty may be the biggest factors that are weighing down ASML's stock of late. If the company were based in the U.S., I think its valuation would likely be far higher than it is right now. But that certainly isn't a reason to shy away from it. According to the consensus analyst price target of nearly $924, the stock could have near-term upside of more than 33%. In the long run, it may rise even higher given the persistent demand for cutting-edge chips. Is ASML a no-brainer buy right now? ASML is a stock that looks like a fantastic buy, perhaps even a no-brainer investment at this point. Between its strong moat, fantastic margins, promising long-term growth, and relatively modest valuation, it checks all the important boxes that long-term investors might look for in a business. Even if the short term is hazy due to macroeconomic conditions, strong demand for all things related to AI suggests that ASML is going to be busy for a long time. It's a stock that I could see going a whole lot higher given its terrific fundamentals, which is why I wouldn't hesitate to buy it for the long haul. Where to invest $1,000 right now When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor's total average return is 1,026%* — a market-crushing outperformance compared to 180% for the S&P 500. They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor. See the stocks » *Stock Advisor returns as of August 4, 2025
Yahoo
27-07-2025
- Business
- Yahoo
ASML: Limited China Risk, Leading-Edge Exposure Could Drive Outperformance
ASML Holding N.V. (NASDAQ:ASML) is one of the . On July 24, New Street Research upgraded the stock to 'Buy' with a €790 price target driven by ASML's strong positioning for 2026 and the potential to outpace peers in the semiconductor capital equipment space. According to New Street, consensus estimates of 2% growth for next year are 'conservative.' They believe that there is 'room for ASML to outperform, driven by high leading-edge exposure.' The company stands to benefit from 'higher growth in leading-edge WFE spending and limited risk of share loss in China,' the firm noted, which would eventually result in growth in the 'upper end of its peer group.' The firm further cited that normal order intake in quarter 3 would allow ASML to ease concerns around growth for 2026. The stock is currently below both its historical averages and peers, but there is limited risk of further de-rating. A technician operating a robotic arm on a production line of semiconductor chips. Moreover, while it remains unclear how much spending will be done on wafer fab equipment, a broader pullback can be expected next year. ASML Holding N.V. (NASDAQ:ASML) develops and sells advanced semiconductor equipment, including lithography, metrology, and inspection systems for chip manufacturing. While we acknowledge the potential of ASML as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: and . Disclosure: None.
Yahoo
24-07-2025
- Business
- Yahoo
My Top AI Growth Stock to Buy Now and Hold Through at Least 2030
Key Points ASML is powering important advancements in artificial intelligence. Its results can fluctuate based on order volumes and the economy. However, ASML shares sport a relatively inexpensive valuation. 10 stocks we like better than ASML › There are numerous ways to invest in artificial intelligence (AI), ranging from companies building and training AI models to organizations deploying AI to enhance existing processes. You can invest in companies that develop digital AI tools or bet on physical AI through robotics and self-driving cars. Alternatively, you can invest in a company like ASML Holding (NASDAQ: ASML), which benefits from the growth of AI, regardless of its application or end use case. Here's why ASML has the makings of a foundational growth stock for long-term investors to buy and hold for years to come. A monopoly on semiconductor manufacturing The semiconductor manufacturing process consists of cleaning chips, depositing materials onto those chips, coating the wafers with positive and negative photoresist, lithography, etching away unwanted materials, implanting positive and negative ions, and packaging. ASML -- which originally stood for Advanced Semiconductor Materials Lithography -- sells systems that essentially print circuit designs layer by layer onto silicon wafers until the 3D structure of the microchip is complete. Lithography is arguably the most complex and important step in manufacturing semiconductors. Suppliers like Applied Materials and Lam Research make equipment that is used in other steps. But no company in the world holds a candle to ASML when it comes to making extremely advanced systems for manufacturing chips for AI applications. ASML's latest models, called extreme ultraviolet (EUV) lithography machines, are essential for fulfilling AI order volumes. The company is seeing a shift in its product mix from memory applications to logic, with 84% of net system bookings in the latest quarter used for logic end-use cases compared to 16% for memory. ASML's EUV machines are really good at making chips for logic, such as graphics processing units (GPUs) and central processing units (CPUs) used to handle complex AI workflows. However, EUV machines are also used for memory chips, such as dynamic random access memory (DRAM). AI models depend on the working memory capacity of DRAM to store data for quick access. ASML sees demand for these EUV machines growing over time to fulfill AI needs. But it won't happen overnight. ASML is forecasting steady growth through 2030 -- including revenue doubling from 2024 levels based on the high end of estimates. For 2025, ASML projects 15% revenue growth and 52% gross margin. But in its second-quarter earnings materials, ASML said that it can't confirm growth in 2026 due to macroeconomic uncertainties and trade tensions. The forecast spooked investors -- causing the stock to fall 10.8% in three days. ASML is built for long-term investors ASML's business model is unlike any other company's in the semiconductor space. Its machines fetch high margins due to their sophistication and use for the most advanced semiconductor applications. But ASML has a different sales cycle than other tech companies. ASML sells its lithography machines to fabrication companies like Taiwan Semiconductor Manufacturing (NYSE: TSM), which produces GPUs for designers like Nvidia (NASDAQ: NVDA), which sells its GPUs to hyperscalers like Microsoft (NASDAQ: MSFT), which uses GPUs in its data centers to service its cloud customers, which are building AI tools and software. It's essential to recognize that ASML's sales are directly influenced by fabs needing to manufacture higher volumes and more complex chips. The timing of when a key ASML customer orders a few machines can alter its results by quite a bit. In ASML's most recent quarter, the company sold 76 new units for 5.596 billion euros in revenue ($6.5 billion) or an average price of $85.5 million per unit. If trade tensions heat up and even one key ASML customer pauses orders, like Taiwan Semi, Samsung Electronics, or Intel, it could throw a wrench in the company's results and derail its short-term growth. That risk is what ASML management called out on its earnings call. Management is being cautious and reminding investors of an inherent characteristic of its business. It is, by no means, a red flag that demand is slowing down. ASML's latest EUV machines are about the size of a double-decker bus and weigh hundreds of thousands of pounds. They take months to ship and install at fab sites, often requiring hundreds of engineers. The complexity and processing of orders make ASML's sales vulnerable to economic cycles and changes in trade policies. ASML has to procure parts from around the world to build these machines in the first place, which would be more expensive if tariffs were to become widespread. In sum, ASML plays an essential role in chip production. But due to the nature of its business model, its results can ebb and flow for factors that have nothing to do with the underlying investment thesis. ASML is a compelling value ASML is telling investors that its results over the next year and half could vary based on tariff policy and the timing of customer spending, but that the long-term future is brighter due to AI's appetite for computing power. So it's best to focus on where the company will be several years from now rather than the coming quarters. Let's assume that ASML achieves its 2025 goal of growing revenue by 15% to 32.55 billion euros ($37.85 billion) and then doesn't grow in 2026 because tariffs lead customers to delay some orders. In that case, ASML would need to increase revenue at a compound annual growth rate (CAGR) of 7.8% over the next four years to reach the low end of its 2030 revenue goal of 44 billion euros ($51.16 billion) and a 16.5% CAGR to reach the high end of its 2030 revenue goal of 60 billion euros ($69.77 billion). It's not a breakneck growth rate, but the ultra-high gross margin allows ASML to convert a substantial amount of revenue into profit, making the stock a great value in terms of earnings per share. In ASML's latest quarter, it earned 7.7 billion euros ($8.92 billion) in sales and 2.3 billion euros ($2.66 billion) in net income for a profit margin of 29.8% and 5.90 euros in earnings per share ($6.85). The conversion from sales to earnings was roughly the same in its first quarter and in 2024 as well. So if we pencil in about 30% profit margin for ASML in 2030, it would generate 13.2 to 20 billion euros ($15.3 to $23.2 billion) in net income -- although the profit margin could be even higher given ASML expects gross margin expansion. Based on ASML's market capitalization of about $289 billion at the time of this writing, the stock is trading for somewhere in the ballpark of 12.4 to 18.9 times 2030 earnings estimates. Its price-to-earnings ratio based on its trailing-12-month earnings is just 26.3. By its current earnings and management's projections through 2030, ASML has become too cheap to ignore. Time to double up on ASML stock ASML checks all the boxes for a stock to own over the long term. It makes high-margin, industry-leading products that address rapidly growing end markets. The company has set clear expectations for 2030 and outlined the technology and end markets that will drive the projected growth. But it also acknowledges that the quarter-to-quarter path to unlock that growth may be choppy. ASML isn't the kind of stock that warrants jumping in and out of, or reading too much into, the day-to-day price action. Rather, it's a company worth owning over the long term if you want exposure to the growth of AI and technological advancement across industries. Should you buy stock in ASML right now? Before you buy stock in ASML, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and ASML wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $641,800!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,023,813!* Now, it's worth noting Stock Advisor's total average return is 1,034% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Daniel Foelber has positions in ASML and Nvidia. The Motley Fool has positions in and recommends ASML, Applied Materials, Intel, Lam Research, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short August 2025 $24 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. My Top AI Growth Stock to Buy Now and Hold Through at Least 2030 was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
