ASML Surges as Semiconductor Demand Jumps
Jan 25, 2024Revenue jumped 30%—but will demand stay this strong?
BREAKING NEWS
ASML—a critical link in the chipmaking supply chain—reported a massive jump in revenue for their earnings this morning. Let’s break down what it means for the AI boom:
WHAT HAPPENED
The Dutch equipment firm generated a $5.66 EPS from $7.66 billion in revenue for Q4, blowing past market expectations. The Street anticipated that lower demand at the end of 2023 would keep chip manufacturing muted. Instead, ASML’s full-year revenue jumped 30% as demand ripped upward early.
HOLDING PATTERN
For clarity, ASML manufactures machines that etch semiconductors. They’re the first stage of advanced chip demand. So, this Q4 jump makes sense with companies boosting their capacity throughout 2024. However, ASML management anticipates that this trend won’t continue accelerating. Instead, 2024 will be relatively flat compared to this growth as major firms gear up for much higher demand in 2025.
WHY IT MATTERS
In the short term, results like this are providing a lot of lift for tech stocks as it appears there’s a lot more semiconductor demand right now than we anticipated. For the medium term though—given ASML is the first real link in the advanced AI chip supply chain—it looks like growth could potentially hit a wall if ASML’s conservative guidance holds for the first few quarters of 2024. That’s something The Street will watch closely across the next few months. But for now, we’ll take the big tech euphoria as ASML stock is surging over 5% as the markets open.
