ASML recently reported exceptional yearly results, driven by a significant influx of new orders amid booming demand in the semiconductor sector. Following this announcement, ASML’s stock jumped 7% at market opening, effectively doubling its market value in just over four months. The company is located in Veldhoven, Netherlands, and has positioned itself favorably to capitalize on developments in artificial intelligence.
Record High Orders Highlight ASML’s Success
The fourth quarter of the financial year was particularly noteworthy. Analysts had anticipated approximately €7 billion in new orders for that period, but ASML instead received €13.2 billion. A large portion of these orders, exceeding €7 billion, was for the most advanced Extreme Ultraviolet (EUV) lithography machines, which are essential for producing cutting-edge chips, including those developed by Nvidia.
Strong Financial Performance
- 2025 Revenue: €32.7 billion, marking a 16% increase year-on-year
- Gross Margin: Improved from 51.3% to 52.8%
- Earnings Per Share: Rose from €19.25 to €24.73
- Net Cash Position: €13.3 billion by year-end
These results put ASML’s order backlog at around €38.8 billion by the end of 2025, nearing the €40 billion mark. Given this strong performance, ASML has announced a €12 billion share buyback program running until December 31, 2028, equivalent to 2.4% of its market capitalization.
Future Projections and Dividends
Looking ahead, ASML has set ambitious targets for 2026. Revenue is expected to range between €34 billion and €39 billion, with gross margins projected to stay between 51% and 53%. The company remains committed to its medium-term goals, aiming for potential revenue of €55 billion by 2030.
To reward investors, ASML also declared a dividend of €7.50 per share for 2025, reflecting a 17% increase from the previous year.
Valuation Concerns and Investment Advice
Although ASML’s current share price is €1302, there are concerns regarding the company’s valuation as it has risen 111% in slightly over four months. With a price-to-earnings (P/E) ratio projected at 37 for 2027, analysts have downgraded their recommendation from ‘buy’ to ‘hold’. This reflects caution in light of the substantial increase in ASML’s valuation.
However, ASML continues to present a compelling opportunity for investors due to its strong order book and promising outlook.
