ASML Stock Surges Amid Hopes of Continued China Business

Why ASML Holding Stock Was Climbing Today | The Motley Fool

The chip equipment maker could be excluded from new export restrictions. Shares of ASML Holdings (ASML 7.38%), the world's largest provider of semiconductor manufacturing equipment, were moving higher today. They were buoyed by an analyst upgrade last night, news that it could be excluded from U.S. chip export restrictions on China, and a broad surge in chip stocks, following a strong earnings report from Advanced Micro Devices. As of 10:18 a.m. ET on Wednesday, the stock was up 7.4%. July has been a rough month for ASML. The stock tumbled in its earnings report earlier this month even as it beat estimates. Fears of restrictions on chip exports to China from the Biden administration have weighed on the stock, and investors appear to be rotating out of chip stocks and into small caps. This morning, ASML got some good news, with Reuters reporting that the Biden administration is planning to exclude ASML from new export restrictions on China. That's a boon for ASML because close to half of its sales come from China. And chip stocks were up broadly on AMD's report after the chipmaker posted 115% revenue growth in the key data-center category, boosting investor confidence in the artificial intelligence boom. Last night, Barclays also raised its rating on ASML from equal weight to overweight, saying that the earlier sell-off in the stock was overdone. That note seemed to come out before the Reuters report. Even after today's gains, ASML seems to offer an attractive entry point. It trades at a price-to-earnings ratio of less than 30 based on 2025 earnings because it's expected to enter a new cycle of growth later this year driven by new extreme ultraviolet (EUV) lithography machines. ASML has significant competitive advantages because it's the only manufacturer of EUVs, which can create intricate patterns on silicon wafers needed for microchips, and the stock looks well positioned for long-term gains, especially if the company is excluded from the new export rules.

ASML jumps on hopes it will be spared in next round of US-China chip fight

The report said the U.S. would exclude allies including the Netherlands, where ASML is based, from new restrictions on equipment sales to half a dozen Chinese chipmaking plants. "Today's news ... definitely alleviates the market's concerns as ASML had nearly half of sales from China in the first half of 2024," said Mizuho Securities analyst Kevin Wang. The share price surge in Europe's biggest tech firm, with a market capitalisation of more than 300 billion euros ($325 billion), is the latest example of trade policy and political moves affecting stocks, rather than earnings or business plans. Wednesday's rise reverses part of a large drop on July 17 following a Bloomberg report that the U.S. was considering unilateral action to restrict equipment exports by allies - including the Netherlands. That obscured largely positive second quarter earnings from ASML that featured growing orders for its most advanced equipment from key customer TSMC amid the AI boom. "We believe strong demand and tight capacity for advanced nodes in logic (computer chips) will drive more orders for ASML in the coming quarters," Wang said. ASML and the Dutch government declined to comment. ASML has a dominant position in lithography, the step of the chipmaking process in which the tiny circuitry of chips is created. U.S.-led restrictions on exports to China imposed since 2020 now cover much of the company's product range, but more limitations remain possible. The company says that while its technology leadership remains intact, its sales will grow along with the semiconductor industry, regardless of where chips are made. But around 20% of ASML's current order backlog is for sales of its older product lines to China and theoretically vulnerable to changes to policy in the short run. Sales to China were a key support to ASML over the past 18 months, when Chinese firms snapped up equipment and few new plants in other regions began producing chips. That should reverse 2025-2026 as new plants come on line in Taiwan, South Korea, the United States and in Europe, many with support from the U.S. "Chips Act" and similar programmes in other countries. (Reporting by Toby SterlingEditing by Mark Potter)

ASML in demand - hope for China business

AMSTERDAM (dpa-AFX) - The shares of semiconductor equipment manufacturer ASML benefited on Wednesday from hopes of less extensive potential business losses in China. They shot up by up to eleven percent to almost 900 euros. Most recently, they led the EuroStoxx 50 with a plus of eight percent to 871 euros. The news agency Reuters had previously reported that the USA wanted to exempt chip industry suppliers from the Netherlands, Japan and South Korea from a next round of export restrictions to China. ASML shares had come under pressure following the publication of half-year figures in mid-July - they had previously reached a high of almost 1,022 euros. ASML produces machines that manufacture the most modern semiconductors. AI applications require such high-performance chips, which is continuously increasing demand at ASML. However, the USA's trade policy is having a negative impact on ASML's business in China, its largest market. Under pressure from the USA, the Netherlands banned the export of some types of ASML machines to China at the beginning of the year. According to the company, around 15 percent of this year's sales in China will be affected by the export regulations imposed in January. Fears had recently increased that the USA could try to enforce even more export bans. ASML is the most valuable group in the eurozone with a Borsen value of almost 350 billion euros and number two in Europe after the Danish pharmaceutical company Novo Nordisk (equivalent to around 535 billion euros) /mis/zb