ASML reports record quarter, customers interested in machines for 2030

🚨$ASML reports a record quarter and customers already want to order machines for 2030‼️

Q3 numbers⤵️

👉Revenue €11.66B, compared to €9.33B in the previous quarter.

👉Net profit rose to €4.96B from €2.92B

👉Gross margin improved to 57.5% from 54%.

🚀Year-over-year revenue grew by 55%🚀

📊ASML sold 113 new lithography systems in the quarter, compared to 86 in the second quarter. In addition, services and upgrades of existing machines also grew. So customers are buying new machines and at the same time upgrading the ones they already have.

📊Some customers are showing interest in ordering ASML tools for 2029 and 2030. Simply put: chipmakers want to reserve a place in line several years ahead today. Demand remains high.

📊The company admitted that the currently planned production capacity for 2027 and 2028 will not cover all customer demand. Therefore, it is exploring how to increase capacity for 2028 above the originally announced 30%.

📊ASML now expects annual revenue of €44 to €45B, whereas previously it was €43 to €45B. For Q4 it expects revenue of €14.2 to €15.2B with a margin of around 57%, which would be another record.

CEO Christophe Fouquet expects AI infrastructure spending to drive chip demand for another two to five years, possibly even beyond 2028.

ASML will pay an interim dividend of €1.88 per share with a payment date of November 4 and during the quarter it bought back shares for €4.1B.

💬 My take:

Results are excellent, but the most important information from the entire report is the customer queue all the way to 2030. ASML stands at the very beginning of the entire AI chain, so its results show what will happen 2 to 3 years later. If TSMC and others are reserving machines for 2030, they are not planning for the AI boom to end next year.

I recommend looking beneath the surface too. Net profit includes €500M from revaluing its stake in Mistral AI. Without this item, profit is still excellent, just a bit less dazzling. Moreover, ASML does not report order numbers or backlog in this year's reports, it only describes orders verbally. The words "customers are interested" do not yet mean signed contracts☝️

For an investor, the key question is how much of this is already priced into the stock. US shares closed before the results at $1,717.76 and the initial reaction was lukewarm, suggesting the market has already largely priced in strong growth. At current levels, I would not buy the stock and would rather wait for a drop to somewhere around $1,200.

👀How do you see the results?

A community member's personal view, not investment advice. Community Guidelines

Kryštof Jáně @krystofjane 2h

The outlook is very, very strong. As a shareholder, I'm satisfied. But for adding to my position, it's not there yet for me.

Vojtěch Šplíchal @vojtechsplichal 3h

I personally would like a price around $1600, which would be very attractive. But the results were very good, especially the outlook for next year.

Victor Nettoyeur @victor_nettoyeur 5h

Why exactly $1200? Do you have a DCF for that?

How could something that was above analyst consensus and beat practically everywhere have been priced into the stock?

The revenue outlook ASML gave about 2 years ago for 2030 is practically what they are doing now, so did the analyst consensus assume it was too conservative and AI demand would drive it that high already this year?

Was it priced in that margins would grow due to higher machine volume and growth in the upgrade/service segment for installed machines?

Was it priced in that the originally estimated 30% production increase would not be enough and would be increased again?

What was the $4 billion stock buyback? Was that already priced in?

Stanislav Sentelik @stanislavsentelik 2h

I apologize, it should be 1200 EUR. As for the model, I calculate it myself. I include a lot of variables that are my subjective observations and of course it can differ significantly from what other models show. Everything you write has a solid argument. However, I don't quite see how they want to cover this demand. Wasn't it mentioned at the earnings call that they plan to increase production capacity, but they are just running at 100% with what they have. By 2030, there is still quite a long time, and a lot of things can change. Already from China we hear that they are trying to replace ASML and their machines can slowly reach a similar level. I take that as a risk that can materialize within 2-3 years and can significantly reduce the company's MOAT. An example for us can be FICO whose MOAT literally evaporated in the last 6 months. That is why my fair value is somewhat lower. Of course, I can be wrong and unnecessarily exaggerate but investing in this stock at such valuations seems too expensive to me. Thank you for the constructive comment. 🤝

⌘ K

StockBot Live

Market situation Wall Street

Wall Street drops on hot inflation and a tech selloff

S&P 500 -1.31% and Nasdaq -2.09% fell as a hot September CPI report revived rate-hike fears. Chip stocks plunged.

Ask about this

StockBot knows 80,000+ stocks worldwide