Semiconductor equipment company. ASML Holding (NASDAQ: ASML) saw its order momentum continue in the fourth quarter. While the stock didn’t gain much momentum with its earnings report, it’s still up more than 30% in January and has more than doubled over the past year, as of this writing.
Given the stock’s strong performance to start the year, let’s take a closer look at its latest results and outlook to determine if it’s too late to buy ASML stock.
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ASML is one of the most important companies in the semiconductor value chain. It has a monopoly on extreme ultraviolet (EUV) lithography technology, which is the manufacturing process used to make advanced chips such as graphics processing units (GPUs) and high-bandwidth memory (HBM). As foundries and memory makers rush to increase capacity due to the rise of artificial intelligence (AI) infrastructure, the company is seeing strong order growth.
For the quarter, its revenue rose 5% to 9.7 billion euros ($11.6 billion) and was at the high end of the company’s guidance range of 9.2 billion to 9.8 billion euros ($11.0 billion to $11.7 billion). Its equipment sales rose 7% year-over-year to 7.6 billion euros ($9.1 billion), while its services revenue fell 1% to 2.1 billion euros ($2.5 billion).
During the quarter, the company sold 94 new and eight used lithography systems compared to 119 new and 13 used systems a year earlier. About 48% of its sales came from higher-priced EUV technology up from 42% a year ago, while 36% of its sales were to China up from 27% a year ago.
However, the biggest news of the quarter was orders from ASML. Its net reserves soared from 5.4 billion euros ($6.4 billion) in the third quarter to 13.2 billion euros ($15.8 billion). That was well above the 6.2 billion euros ($7.4 billion) in net reserves that analysts were expecting, according to Visible Alpha.
Looking ahead, the company forecasts first-quarter revenue between €8.2 billion ($9.8 billion) and €8.9 billion ($10.6 billion) and 2026 revenue of between €34 billion ($40.6 billion) and €39 billion ($46.5 billion), representing growth of 4% to 19%.
As a monopoly on the technology needed to make advanced chips and memory, ASML is in a good position. However, its revenue growth, while strong, has not been as strong as you might think it should be, given the huge demand for data center infrastructure. This is largely due to a slowdown in its revenues in China. It is not allowed to sell its EUV technology in the country, and there has been an increase in demand for even its oldest machines.