ASML Holding N.V., the Dutch manufacturer of chip-producing equipment, reported exceptional financial results for the fourth quarter of 2024, driven by the surging demand for semiconductor technology pertinent to artificial intelligence (AI) applications. The company’s shares surged following the announcement, reflecting growing investor optimism about its future.
For the last quarter of 2024, ASML posted record revenues of €9.3 billion, surpassing initial estimates of €9.02 billion. This marked a significant rise from the previous quarter's €7.5 billion, marking the company's strong recovery from earlier setbacks. The improved revenue record was complemented by a gross margin of 51.7%, outperforming earlier predictions.
"Our fourth quarter was a record year. This was mainly due to additional upgrades. We were also able to generate revenue from two High NA EUV systems and delivered a third High NA EUV system to a customer," said ASML CEO Christophe Fouquet following the results announcement.
ASML's order intake for Q4 2024 also exceeded market expectations, amounting to €7.1 billion, substantially higher than the anticipated €3.53 billion. Last year, the company had orders of €9.2 billion, highlighting the competitive market pressures they are currently facing. Despite this drop compared to the previous year, analysts were reassured by ASML’s achievements contesting the fears of stagnation.
Analysts from Goldman Sachs noted, "ASML's fourth quarter results will likely provide comfort to investors today," attributing the success to not just the revenue obliteration but also the operational strategies effectively tackling the market's unpredictability.
Widespread concerns over competition from China's AI advancements, particularly with the new Open Source AI model from DeepSeek, pressured ASML's stock at the beginning of the week, leading to speculation about the company's sustainability and future prospects. Nevertheless, as the market digested ASML’s reported results, confidence grew, propelling the stock up almost 10% after the announcement.
ASML forecasts revenues ranging between €30 billion and €35 billion for 2025, with AI expected to remain the pivotal growth engine driving this growth. "The market growth driven by artificial intelligence is changing the dynamics of our industry," stated Fouquet, pointing out the shift within their operational expectations.
The geopolitical scenario remains complicated, especially following U.S. sanctions against China, which hindered ASML's capacity to export its advanced machines. The U.S. restrictions continue to perturb trade relations, as evidenced by ASML’s inability to sell the most advanced Extreme Ultraviolet (EUV) lithography machines to Chinese firms.
Despite these substantial barriers, ASML reported strong demands from customers worldwide, indicating confidence within the semiconductor industry. Taiwan Semiconductor Manufacturing Co (TSMC), ASML's principal client, indicated significant investments exceeding expectations, significantly benefitting the Dutch chip equipment supplier.
Interestingly, ASML has opted not to disclose order volumes after 2025, switching instead to reporting on backlog amounts. This shift reflects ASML’s effort to stabilize market projections and manage expectations more judiciously amid the increasingly volatile semiconductor environment.
Investor reactions remain optimistic, especially after ASML’s announcement of plans to increase dividends to €6.40 per share for 2024, marking nearly a 5% increase year-on-year. The financial health shown by ASML, alongside its firm outlook, is indicative of the broader sentiment within the semiconductor market's future amid potential industry disruptions.
ASML's stock performance, which has seen fluctuations and notable highs, signifies not only the firm’s fiscal triumphs but also its strategic positions aimed at sustaining growth and capturing the burgeoning demand indicative of the global AI boom. The momentum gained from Q4 results may very well reinforce ASML's standing as the foremost supplier for cutting-edge manufacturing technology as it navigates the vicissitudes of the semiconductor market and international trade dynamics.