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ASML Defies Competition with Surging Q4 Orders and Record Profits

Word on the StreetWednesday, Jan 29, 2025 11:01 am ET

1min read

In a remarkable testament to the strength of demand, ASML, the Dutch semiconductor equipment giant, reported a significant fourth-quarter performance for 2024. Net orders for the period reached €70.9 billion, a staggering 169% increase from the previous quarter, surpassing analysts' expectations by nearly 80%. This robust demand showcases resilience in the face of concerns about competitive threats from China's DeepSeek, a burgeoning AI startup known for its cost-effective chatbots.

ASML's fourth-quarter revenue totaled €92.63 billion, slightly exceeding market anticipations of €90.3 billion. This success was largely driven by increased shipments of its cutting-edge EUV and ArFi products. The company recorded a net profit of €26.93 billion, marking a 31.5% year-over-year increase, which also exceeded analyst forecasts.

The company's future outlook remains promising, as indicated by its forecast for Q1 2025 sales of €75-80 billion, slightly above market predictions of €72 billion. High confidence is evident in ASML's continued demand for its products, driven by industry-leading technology advances.

ASML's share prices saw a substantial rise post-earnings announcement, reflecting investor confidence in the company's enduring market strength. This quarter's order backlog, standing at €70.88 billion, marks a significant recovery from the previous quarter and reinstates faith in the company's capability to sustain growth amidst evolving market dynamics.

ASML's continued growth is powered by its dominance in system sales revenue, which constitutes approximately 80% of the company's earnings. In Q4, EUV shipments reached 14 units, while ArFi shipments increased to 39 units, both contributing to the revenue surge. The average selling price of its lithography systems climbed to €53.9 million per unit.

Geographically, ASML's revenue distribution is balanced, with major contributions coming from the United States, China, and South Korea, each accounting for approximately 25%-30% of the total income. Despite challenges in China due to export restrictions and other factors, ASML maintains a strong market presence across other key regions.

While the booming AI market, driven by substantial capital expenditures from key players like TSMC, supports ASML's ambitious revenue targets for 2025, uncertainties remain due to factors involving major clients such as Intel and Samsung. Nevertheless, ASML's advanced lithography technology and strategic positioning ensure its continued leverage over the long-term high-margin EUV market.

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