ASML - Riding The Chip Wave: Can ASML Maintain Momentum

2024-06-06 07:22:03 ET

Summary

• ASML has a dominant market share in lithography and a monopoly on EUV technology, positioning the company to benefit from AI and other growth trends.
• ASML's business model generates long-term revenue growth at high margins, with potential margin expansion by 2030.
• Recent order volatility has led to a weak start to the year, but there are signs of improvement in EUV trends, particularly in orders and revenue per unit.
• Stock has regained momentum and is attempting a break out into all-time highs.

The bull case on ASML Holding ( ASML ) ( ASMLF ) (ASMLD) is generally simple. ASML has an 80%+ market share in lithography, with an effective monopoly on EUV technology. As there are no viable competitors, ASML’s technology is crucial for chip manufacturing and positions the company to benefit from structural growth trends in artificial intelligence ((AI)) and other areas. While order fluctuations cause quarterly volatility, ASML's business model is able to generate long-term revenue growth at high margins, with the potential for further margin expansion by 2030. Recent order volatility has led to a weak start to the year, but there are signs that trends in EUV will improve soon, particularly with regard to orders and revenue per unit....

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