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New: Introducing “Why Is It Moving?” - lightning-fast, AI-driven explanations of stock moves
ASML remained on track, even as revenue was flat in the third quarter.
The company should eventually be a winner in the artificial intelligence (AI) boom.
It's a clear beneficiary of cooling trade tensions with China.
Shares of ASML (NASDAQ: ASML) were among the winners this week, as the Dutch manufacturer of lithography machines to make semiconductors posted better-than-expected results in its third-quarter earnings report and benefited from a broader upswing in tech and AI stocks, as well as the cooling off of trade tensions around China.
As of Thursday at 12:22 p.m. ET, the stock was up 8.8% for the week, according to data from S&P Global Market Intelligence.
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Coming into the third-quarter earnings report, ASML stock had been on an upswing, as investors bet that the artificial intelligence (AI) boom would finally carry over to the semiconductor manufacturing segment.
Revenue in the quarter rose 0.7% year over year, but system sales were down 6%. Instead, services drove overall revenue higher.
On the bottom line, earnings per share improved from 5.28 euros to 5.48 euros, and the results were in line with the company's guidance. The stock finished Wednesday, the day of the report, up 2.5%.
Management said it continues to see positive momentum in AI, and it shipped its first product with advanced packaging, a good sign for future growth. The company also said its partnership with Mistral AI, a French AI start-up, allows it to embed AI across its entire portfolio.
It expects revenue growth in 2025, and called for fourth-quarter revenue of 9.2 billion euros to 9.8 billion euros, its seasonally strongest quarter of the year. For 2015, it continues to forecast 15% revenue growth with a gross margin of 52%.
Investors are still waiting to see ASML's revenue growth accelerate, but fourth-quarter guidance offers some encouragement.
The company enjoys a strong competitive advantage in its industry as the only maker of EUV lithography machines, but that hasn't led to strong growth yet. Still, that should eventually change, especially if the AI boom continues.
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Jeremy Bowman has positions in ASML. The Motley Fool has positions in and recommends ASML. The Motley Fool has a disclosure policy.
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