ASML - ASML: The Linchpin To The Next Cloud Super Cycle

2024-06-22 10:00:00 ET

Summary

• ASML has recorded another impressive rally of +24.4% from our recommended entry point of $850s, with the much-needed pullback materializing by early May 2024.
• Despite so, we are still recommending a Buy upon the next dip to $900s, with the company reporting robust FQ1'24 numbers while raising its FY2025 guidance.
• Much of ASML's tailwinds are attributed to the expanded capacity in 2025/ 2026, allowing the company to fulfill its multi-year backlog as generative AI demand grows.
• It is apparent that none of the top 3 foundries are willing to take chances in delaying their capex, with the high NA EUV machines capable of producing the highest-end "AI applications and advanced consumer electronics."
• Readers must also not forget that automotive and renewable energy end markets are increasingly consuming more semiconductor chips, with ASML likely to enjoy multiple growth drivers moving forward.

We previously covered ASML Holding N.V. ( ASML ) ( OTCPK:ASMLF ) in April 2024, discussing why it remained a long-term winner as we entered the next cloud super cycle, thanks to the insatiable demand for generative AI SaaS and Nvidia's ( NVDA ) double-digit growth.

Despite the growing bookings and multi-year backlog, we had also encouraged readers to wait for a moderate retracement for an improved margin of safety, preferably at its previous trading range of between $770s and $880s....

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