ASML Setting New Records For Orders, And The Peak May Not Yet Be In Sight

 

These are unusual days in the semiconductor sector, as fabs continue to commit more capex to expand production and ease global shortages across multiple markets. That, in turn, has fueled record orders for ASML (ASML), but this lithography leader has more than just a short-term story. Between increasing chip content in markets like autos and factories (robotics, IoT, et al), and seemingly endlessly higher expectations for performance in areas like AI and communications, demand for leading edge EUV lithography systems looks strong through 2025.

These shares were already hard to value back in late January, as there was no real question of strong incoming order growth, but valid questions about exactly how to value that growth (or whether to just give up and say “buy it anyway”). Now the shares are 40% higher and with a quarter in hand where orders exceeded the prior peak by 60% … and likely more orders on the way.

Valuation seems more like an exercise in “pick your price target and work backward”, but in the short term at least it’s hard to argue with playing growing capex spending through a leading supplier of enabling equipment with a near-monopoly across most of its business and a literal monopoly in the most sophisticated equipment.

 

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ASML Setting New Records For Orders, And The Peak May Not Yet Be In Sight