There’s a huge demand for semiconductors, especially for AI, with companies investing billions in new chips. ASML, a leading semiconductor equipment maker, saw its stock rise 40% earlier this year but has since lost those gains due to slowing orders outside the AI sector. Its stock is down 36% from its peak but could be a good buying opportunity as it trades around $700 per share.
Orders Slow Amid AI Demand
ASML specializes in advanced lithography machines essential for creating cutting-edge semiconductors. Despite expectations for rising orders driven by AI, the company recorded only €2.6 billion in orders in Q3, significantly down from last year’s €5 billion. ASML’s revenue grew to approximately $8.1 billion during the same period, but delays mean new orders won’t boost revenue for a year or more.
Long-Term Revenue Outlook
The semiconductor equipment market is cyclical, and ASML is currently in a down cycle outside of AI, leading to lower revenue projections for 2025. However, ASML anticipates a 9% annual increase in sales through 2030, potentially reaching $54.2 billion in revenue by then. If it maintains its 30% operating margin, that could mean around $16.3 billion in profits.
Dividend Growth Potential
ASML’s stock can grow over the next five years, offering dividends alongside capital appreciation. The dividend has increased by 710% over the past decade, and while the current yield is under 1%, there’s plenty of room for growth as the company continues to buy back shares and increase payouts. A stock split is also likely if the share price approaches $1,000.
