ASML shares close at record high after earnings beat, orders pop
Reuters
Published Jan 24, 2024 18:03
Updated Jan 25, 2024 04:46
By Toby Sterling
VELDHOVEN, Netherlands (Reuters) -ASML Holding shares gained nearly 10% to close at a record high on Wednesday following fourth-quarter earnings that beat expectations and a growing order backlog that points to a computer chip market recovery.
Europe's largest technology company by market value maintained an outlook for flat sales in 2024 as it faces new restrictions on sales to China, but executives acknowledged that estimate is conservative.
Shares in the Dutch company closed at 775.80 euros in Amsterdam, a 9.7% rise that took the company's market capitalisation above 300 billion euros ($327 billion) for the first time.
Net profit rose 9% to 2.0 billion euros ($2.2 billion) on sales of 7.2 billion euros in the fourth quarter. That topped analyst expectations of a 1.87 billion euros net profit on revenue of 6.9 billion euros, according to LSEG data.
The company registered orders of more than 9 billion euros in the quarter, more than triple third-quarter levels, but kept its outlook for flat sales in 2024. New orders came from chip-makers planning to bring capacity online in late 2024 or in 2025 amid strong demand for artificial intelligence chips.
"The semiconductor industry continues to work through the bottom of the cycle," CEO Peter Wennink said in a statement.
"Although our customers are still not certain about the shape of the semiconductor market recovery this year, there are some positive signs," he said, citing improving demand for chips and higher factory utilisation rates.
ASML (AS:ASML) said it received orders of 5.6 billion euros for its most advanced "extreme ultraviolet," or EUV, machines, including "multiple orders" for its new "High NA" EUV machines, which cost more than $300 million each. ASML shipped the first to Intel (NASDAQ:INTC) last month.
"The EUV order intake has massively surprised on the upside, (with) some High NA orders in the order intake as well," Robert Schramm-Fuchs, portfolio manager at ASML investor Janus Henderson, said.
"The crucial thing for us this morning is it really dispels the bear argument on the midterm technology progression outlook."
The new orders for equipment used to make high end chips will have been booked by companies like Taiwan's TSMC, which makes chips for Apple (NASDAQ:AAPL) and Nvidia. TSMC, is ASML's biggest customer, said last week its expected capital expenditure would be flat in 2024. Intel, Samsung (KS:005930), SK Hynix and Micron (NASDAQ:MU) also use ASML's top equipment.
ASML dominates the global market for lithography systems that help create the circuitry of chips.
"After the good results and the good outlook from TSMC last week, people were hoping that they would increase their outlook for 2024. But they're still a little bit conservative," analyst Jos Versteeg of InsingerGilissen said.
Get The App
He said the company would likely raise forecasts later this year as end-markets continue to recover.
The company said sales to China, usually its third-largest market after Taiwan and South Korea, would be impacted in 2024 by new U.S. and Dutch export restrictions introduced in 2023, affecting up to 15% of its China sales.
($1 = 0.9207 euros)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.