High-performance processor chips-the basis for AI, autonomous driving and the IoT. (Photo: Freepik, rawpixel.com)
With a market capitalization of 230 billion euros, ASML is the most valuable company in the Netherlands. The reason is obvious. ASML has a monopoly position in the semiconductor industry and thus in digitization. Nevertheless, the machine manufacturer’s share has lost almost 45 percent of the stock market value in a few months. What concerns the stock burden? What risks must be observed?
ASML-the giant of the chip world
For decades the ASML Holding NV her monopoly developed. The foundation stone was laid in 1984 when ASML was spun off from the Philips Group. In 2001 the Valley Group, a US company, was taken over by central patents and technology in the EUV lithography. With the secured know-how, competitors Canon and Nikon were displaced, which withdrawn completely from EUV research.
In partnership with the largest customers TSMC, Intel and Samsung today, ASML invested billions in the development of EUV technology. ASML developed with around 17,000 patents into the only manufacturer of EUV lithograph systems. The technological leadership of ASML is hardly attackable due to the enormous development and production costs.
Price law and margin expansion thanks to monopoly
Companies with monopoly benefit from their market position and have a corresponding power power. The gross margin has therefore been increased to 51 percent over the years. By 2030 it is said to be 56 to 60 percent. At the same time, the research and development expenditure decreases relatively with increasing order inputs because ASML can distribute the fixed costs to a larger volume. ASML’s operational margin is already 32 percent.
Recurring sales only at 25 percent
Despite the burial grave, ASML also has disadvantages as an investment. Only 25 percent of sales are recurring contractual service sales. Another 42 percent are achieved with the sale of expensive EUV machines and 32 percent with the cheaper and less complex DUV lithographic machines. Depending on the economic situation, the sales of ASML vary. In 2024, 44 EUV machines and 374 DUV units were sold. The fluctuation width in EUV machines was 40 to 70 machines between 2020 and 2024 alone.
From AI hype back to historical mean values
While the share in the summer of 2024 due to the AI hypes new evaluation records with one Course-profit ratio (KGV) reached over 50, followed what had to follow sooner or later. ASML had to correct and today stands at a KGV of only 23 of a rating that has not been too high for ASML in the past 10 years.
Nevertheless, investors were less enthusiastic about the latest quarterly figures. The reason was in the low order inputs for EUV machines. They not only drive sales, they also increase margins. Nevertheless, the number of orders due to time changes are very volatile and forecasts are rarely the final result. In the last quarter, the orders were more than 4 billion euros above the consensus. In this quarter they are one billion euros below.
Macroeconomic uncertainties put a strain on the stock
Economic uncertainties, geopolitical tensions and possible trade conflicts additionally dampen the mood. Investments in new manufacturing technologies could be delayed, which ASML would also feel. Nevertheless: For 2025, the introduction of a new EUV model is planned. In addition, the underlying demand for more powerful chips remains. An order not placed in 2025 is usually not a lost order, but is simply postponed.
Management continues to adhere to the sales goals for 2025. 30 to 35 billion euros are expected. If this demand does not weaken, management still expects sales at the upper end of the forecast range and sales growth in the double -digit percentage range.
ASML – buy now?
ASML is strategically positioned to benefit from central technology trends such as artificial intelligence, robotics, autonomous driving, 5G and the Internet of Things. The current assessment is on the historical means, while the company is constantly expanding its market position.
The Free Cashflow margin recently was 32 percent and gives a lot of scope for investments and stock returns. Nevertheless, ASML is exposed to the economic economy and political measures, while long -term prospects for growth are.
Disclaimer:
No investment advice. No call to buy or sell securities.