Semiconductor equipment giant ASML’s order book expected to benefit from AI chip boom

“We expect ASML’s order received value to reach close to 5 billion euros [US$5.4 billion] in the second quarter, higher than consensus estimates,” Mihuzo analyst Kevin Wang said, with strong orders from TSMC of ASML’s EUV product line.

ASML, worth about 400 billion euros, has described 2024 as a “transition” year when business will be flat before rebounding strongly in 2025, driven by demand for its most advanced tools.

Shares in the group have risen 45 per cent this year and are trading near record highs above 1,000 euros each, about 40 times forecast 12-month forward earnings, significantly higher than the STOXX Europe 600 tech index.

A growing order book would reassure investors that demand for ASML’s most advanced products is returning, following a weak first half of 2024, in which the company relied heavily on orders of older equipment from China.

Analysts are expecting second-quarter net income of 1.41 billion euros on revenue of 6.04 billion euros, according to the mean estimate from 16 analysts, based on London Stock Exchange Group data.

That compares with net income of 1.94 billion euros on revenue of 6.90 billion euros in the same period a year ago.

ASML had a 38-billion-euro order backlog at the end of the first quarter. That means it needs new orders of 4 billion euros to 6 billion euros each quarter to meet its forecast of 2025 sales at the upper end of a 30-billion-euro to 40-billion-euro range.

ASML argues that world needs older chips, as was shown by shortages during the Covid-19 pandemic, and China is stepping in to supply them.