Is it time to buy the dip in ASML stock?

Demand for artificial intelligence (AI) chips has surged in recent years as major technology companies, startups, and governments compete for cutting-edge technology to power AI models and applications. As AI gains momentum, growth forecasts for AI applications are becoming increasingly ambitious, driving the market's meteoric rise. AI stocks.

ASML Holdings NV (ASML) We have a unique position in the market as the exclusive provider of high-end lithography systems essential to the manufacturing of Nvidia Corporation's high-end chips. (NVDA)Advanced Micro Devices Co., Ltd. (AMD), and other major chip manufacturers. ASML stock had been rising steadily this year, but soared when the company announced first-quarter results on April 17, raising investor concerns about weak spending in the semiconductor equipment market.

ASML stock is trading 13.7% below its share price. 52-week high $1,056.34, set on March 7th, does this drop represent a buying opportunity? Let's take a closer look.

About ASML Holdings stock

ASML Holdings NV established in 1984 (ASML)Headquartered in the Netherlands, the company develops, produces, markets, sells and services advanced semiconductor equipment systems for chip manufacturers. The company provides lithography, metrology, and inspection systems for the semiconductor market. have a de facto monopoly. The current market capitalization is $361.9 billion.

ASML Holdings shares are 40.8% sharp increase It has outperformed the S&P 500 index over the past 52 weeks. ($SPX) 26.6% increase over this period. Even accounting for the fallout from the disappointing first-quarter results, ASML stock is up 20.5% year-to-date, outpacing his SPX's return of 9.5% over the same period.

The Dutch semiconductor manufacturing equipment giant announced plans to increase its dividend late last month. ASML's Board of Directors had declared a final dividend payment of EUR 1.75 per ordinary share. The company's annual dividend is $5.57, equivalent to a dividend yield of 0.60%. Additionally, ASML maintains its commitment to growth and flexibility for potential dividend increases with his modest 28.4% payout ratio.

The company also Stock buyback plan The company will repurchase its own shares by October 24, 2025, at a price ranging from the nominal price to 110% of the market price.

the price is Forecast PER is 45.58 times At 12.09 times sales, ASML trades at a premium compared to peers such as Applied Materials. (Amat). However, the company's price-to-earnings ratio (P/E) of 2.28x is lower than Applied Materials, which trades at 3.08x.

ASML's First Quarter Earnings Results

ASML stock It fell sharply on April 17th. After the company announced disappointing first quarter results. Net sales fell 21.6% for the year to 5.3 billion euros, below Wall Street expectations. Earnings of 3.11 euros per share were also down 37.2% for the year, but about 19% higher than analysts expected.

ASML's net bookings for machines, a closely monitored indicator, amounted to €3.6 billion, down 4% year-on-year and almost year-on-year. Two-thirds plummeted Comparison with December quarter. In addition, sales of new lithography systems also declined significantly.

The company expects full-year revenue to be flat compared to 2023, but expects a strong second half as the industry continues to recover. “We believe 2024 will be a transition year as we continue to invest in both capacity and technology to prepare for the cycle shift,” said Peter Wennink, ASML's outgoing president and CEO. “There is,” he said.

ASML's equipment is in demand from major chip makers such as Taiwan Semiconductor Manufacturing Co. (TSM)Samsung, Intel Corporation (INTC). These companies are expanding production in the United States with funding from the CHIPS Act, and new construction is expected to support demand for ASML's specialized equipment.

Additionally, ASML has so far resiliently weathered export restrictions to China. It had previously predicted that export restrictions could affect 10-15% of China's sales this year. China sales in the first quarter accounted for 49% of system sales, up significantly from 39% in the fourth quarter of 2023, exceeding initial expectations, due to US-led export pressure for advanced chip manufacturing equipment. .

Analysts that track ASML Holdings have made predictions about ASML Holdings' performance. EPS decreased 6.9% to $20.04 It will grow by 52.3% in FY2024 to $30.52 in FY2025.

What do analysts expect from ASML Holdings stock?

ASML's post-Q1 earnings note stated: jeffries analyst We endorsed our bullish outlook on ASML, maintaining a Buy rating and calling it a Top Pick. They said the post-earnings drop in stock prices could be a buying opportunity before expected sales growth later this year pushes the stock higher again.

Additionally, Argus analyst Jim Kelleher reiterated: “Buy” rating on ASML The price target is $1,000, implying a potential upside of 9.9% from current price levels. Kelleher remains cautious this year, but is optimistic about ASML's future, citing its unparalleled expertise in EUV lithography, which is expected to drive significant growth in 2025 amid strong demand for AI-enabled chips. It is.

Overall, ASML has a consensus rating of Strong Buy. Of the 18 analysts covering the stock, 15 advise a “strong buy” and the remaining three suggest a “hold.”

of Analyst average price target ASML Holdings stock price is $1,081.86, representing an 18.9% upside potential. The high price target of $1,172 suggests the stock could rise as much as 28.8%.

On the date of publication, Shristi Suman Jayaswal I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Summarize this content to 100 words
Demand for artificial intelligence (AI) chips has surged in recent years as major technology companies, startups, and governments compete for cutting-edge technology to power AI models and applications. As AI gains momentum, growth forecasts for AI applications are becoming increasingly ambitious, driving the market's meteoric rise. AI stocks.ASML Holdings NV (ASML) We have a unique position in the market as the exclusive provider of high-end lithography systems essential to the manufacturing of Nvidia Corporation's high-end chips. (NVDA)Advanced Micro Devices Co., Ltd. (AMD), and other major chip manufacturers. ASML stock had been rising steadily this year, but soared when the company announced first-quarter results on April 17, raising investor concerns about weak spending in the semiconductor equipment market.

ASML stock is trading 13.7% below its share price. 52-week high $1,056.34, set on March 7th, does this drop represent a buying opportunity? Let's take a closer look.About ASML Holdings stockASML Holdings NV established in 1984 (ASML)Headquartered in the Netherlands, the company develops, produces, markets, sells and services advanced semiconductor equipment systems for chip manufacturers. The company provides lithography, metrology, and inspection systems for the semiconductor market. have a de facto monopoly. The current market capitalization is $361.9 billion.ASML Holdings shares are 40.8% sharp increase It has outperformed the S&P 500 index over the past 52 weeks. ($SPX) 26.6% increase over this period. Even accounting for the fallout from the disappointing first-quarter results, ASML stock is up 20.5% year-to-date, outpacing his SPX's return of 9.5% over the same period. www.barchart.com
The Dutch semiconductor manufacturing equipment giant announced plans to increase its dividend late last month. ASML's Board of Directors had declared a final dividend payment of EUR 1.75 per ordinary share. The company's annual dividend is $5.57, equivalent to a dividend yield of 0.60%. Additionally, ASML maintains its commitment to growth and flexibility for potential dividend increases with his modest 28.4% payout ratio.The company also Stock buyback plan The company will repurchase its own shares by October 24, 2025, at a price ranging from the nominal price to 110% of the market price.

the price is Forecast PER is 45.58 times At 12.09 times sales, ASML trades at a premium compared to peers such as Applied Materials. (Amat). However, the company's price-to-earnings ratio (P/E) of 2.28x is lower than Applied Materials, which trades at 3.08x.ASML's First Quarter Earnings ResultsASML stock It fell sharply on April 17th. After the company announced disappointing first quarter results. Net sales fell 21.6% for the year to 5.3 billion euros, below Wall Street expectations. Earnings of 3.11 euros per share were also down 37.2% for the year, but about 19% higher than analysts expected.ASML's net bookings for machines, a closely monitored indicator, amounted to €3.6 billion, down 4% year-on-year and almost year-on-year. Two-thirds plummeted Comparison with December quarter. In addition, sales of new lithography systems also declined significantly.The company expects full-year revenue to be flat compared to 2023, but expects a strong second half as the industry continues to recover. “We believe 2024 will be a transition year as we continue to invest in both capacity and technology to prepare for the cycle shift,” said Peter Wennink, ASML's outgoing president and CEO. “There is,” he said.ASML's equipment is in demand from major chip makers such as Taiwan Semiconductor Manufacturing Co. (TSM)Samsung, Intel Corporation (INTC). These companies are expanding production in the United States with funding from the CHIPS Act, and new construction is expected to support demand for ASML's specialized equipment.

Additionally, ASML has so far resiliently weathered export restrictions to China. It had previously predicted that export restrictions could affect 10-15% of China's sales this year. China sales in the first quarter accounted for 49% of system sales, up significantly from 39% in the fourth quarter of 2023, exceeding initial expectations, due to US-led export pressure for advanced chip manufacturing equipment. .Analysts that track ASML Holdings have made predictions about ASML Holdings' performance. EPS decreased 6.9% to $20.04 It will grow by 52.3% in FY2024 to $30.52 in FY2025.What do analysts expect from ASML Holdings stock?ASML's post-Q1 earnings note stated: jeffries analyst We endorsed our bullish outlook on ASML, maintaining a Buy rating and calling it a Top Pick. They said the post-earnings drop in stock prices could be a buying opportunity before expected sales growth later this year pushes the stock higher again.Additionally, Argus analyst Jim Kelleher reiterated: “Buy” rating on ASML The price target is $1,000, implying a potential upside of 9.9% from current price levels. Kelleher remains cautious this year, but is optimistic about ASML's future, citing its unparalleled expertise in EUV lithography, which is expected to drive significant growth in 2025 amid strong demand for AI-enabled chips. It is. Overall, ASML has a consensus rating of Strong Buy. Of the 18 analysts covering the stock, 15 advise a “strong buy” and the remaining three suggest a “hold.”

www.barchart.com
of Analyst average price target ASML Holdings stock price is $1,081.86, representing an 18.9% upside potential. The high price target of $1,172 suggests the stock could rise as much as 28.8%.
On the date of publication, Shristi Suman Jayaswal I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/is-it-time-to-buy-the-dip-in-asml-stock Is it time to buy the dip in ASML stock?