ASML Holding NV, the Dutch powerhouse behind advanced semiconductor manufacturing equipment, reported exceptional fourth-quarter earnings for 2024, surpassing analysts’ expectations and sending its stock surging by more than 10% on Wednesday.
The results revealed net sales of €9.3 billion (approximately $9.8 billion) for the quarter, beating the consensus estimate of €9.07 billion. Net profit also exceeded projections, reaching €2.69 billion compared to the anticipated €2.64 billion.
According to ASML, the fourth-quarter net bookings soared to €7.09 billion—significantly up by 169% from €2.63 billion reported during the preceding quarter and well above the €3.99 billion forecast from analysts at Visible Alpha.
"We are witnessing strong demand for our most advanced tools, even amid concerns triggered by competition with Chinese startups like DeepSeek, which have introduced lower-cost AI models," ASML CEO Christophe Fouquet stated, indicating the company's resilience against external pressures.
The share price bolstered by about 11% earlier as investors enthusiastically reacted to ASML's strong bookings. These bookings, particularly significant for their extreme ultraviolet (EUV) lithography machines, amounted to around €3 billion, underscoring ASML's pivotal role at the heart of the semiconductor supply chain.
ASML has proven itself to be staunchly positioned against rising concerns about how the DeepSeek model might impact AI spending. Following DeepSeek's announcement, there were fears of reduced demand for high-precision equipment necessary for crafting state-of-the-art chips. Reflecting on the competition, Fouquet expressed optimism, noting, "A lower cost of AI could mean more applications. More applications mean more demand over time. We see this as an opportunity for increased chip demand.
Reflective of the broader market sentiment, ASML's stellar performance provides reassurance to investors, particularly following recent apprehension within the tech sector. Analysts like Ben Barringer from Quilter Cheviot emphasized this sentiment, stating, "The earnings report offers reassurance to the market following the turmoil due to concerns around DeepSeek." Michael Field from Morningstar added, "This vindicates the view of ASML being neither overvalued nor mere puff. The numbers support our investment thesis, showing ASML's shares offer valuing at around €850, indicating significant upside potential for investors."
For the entirety of 2024, ASML achieved total revenue of €28.3 billion (roughly $29.7 billion), maintaining gross margins of 51.3%. The company did not shy away from shareholder rewards, returning €3.0 billion through dividends and buybacks.
Looking to the future, ASML provided guidance projecting revenues between €30 billion and €35 billion for 2025, with anticipated first-quarter net sales forecasted between €7.5 billion to €8.0 billion. They also expect their gross margin to be between 52% and 53% during this period.
Despite the upbeat outlook, ASML acknowledges challenges on the horizon. The company anticipates adjusting the ratio of its business from China as demand stabilizes following heightened interest amid U.S.-imposed restrictions. “We had significant backlogs related to Chinese orders at the end of 2022, due to previous limitations on market supply. This backlog has mostly been absorbed, and we expect demand ratios to normalize,” commented Fouquet.
On the macroeconomic front, European markets showed mixed performance with investor caution persisting before key monetary policy meetings involving the European Central Bank. This backdrop highlights the importance of ASML’s stable demand amid uncertainty brought about by changing global economic conditions.
With such compelling financial indicators, ASML continues to stand resilient, leveraging its leadership role within the semiconductor industry. The company’s strong emphasis on AI applications signals growth not just for ASML, but for the industry, bolstering investor confidence moving forward.