ASML (ASML.US) will report its third-quarter results on Wednesday, October 16. The market expects the company's Q3 revenue to grow 7% YoY to 7.1bn euros.
The company produces lithography machines, which are crucial for the production of semiconductor chips, making it a major beneficiary of the AI boom.
ASML's share price has risen 11% this year, despite recent pullbacks.
Derren Nathan, head of stock research at Hargreaves Lansdown, said ASML's revenue so far this year has lagged behind 2023 levels.
ASML reported Q2 revenue of 6.24bn euros in July, down from 6.9bn euros in the same period in 2023, with net profit falling to 1.58bn euros from 1.94bn euros a year ago.
Nathan said: "The company is banking on a seasonal shift in sales of microchip manufacturing systems in the last two quarters of this year to keep overall revenue flat in 2024."
Nathan said analysts expect revenue to rise more than 24% sequentially to 8.8bn euros in Q4.
He said ASML's technological leadership allows it to benefit from long-term trends such as AI, but some of its key customers are also facing their own challenges, so investors will also be looking for any signs of the company's outlook next year, which is currently expected to see further acceleration.
Morningstar, the international authority on ratings, is also bullish on ASML's long-term prospects. Analyst Javier Correonero said ASML is not far off hitting the threshold for orders to reach the midpoint of its 2025 guidance range. Correonero expects ASML's 2025 revenue to be 36.7bn euros, while guidance is 30-40bn euros.
Morningstar expects ASML's orders and revenue in China to normalise, but it is hard to judge when that will happen.
Investors and analysts will also be trying to understand the impact of Intel's (INTC.US) production woes on ASML. Intel is likely to be ASML's third-largest customer and recently delayed plans to open a factory in Germany. Morningstar is not too worried in the long run, as if Intel runs into more problems and delays or cancels factories, others will eventually grab the opportunity.
Overall, Morningstar sees ASML's long-term prospects as strong, with the share price pullback providing a good buying opportunity. Morningstar sees the stock's fair value at 900 euros.