$ASML Quick Thoughts
Q1 results are coming, and so are the buybacks, bookings, and geopolitically-fueled tailwinds.
ASML reports Q1 2025 earnings this Wednesday, April 16.
Everyone’s chasing AI hardware. $ASML quietly sells the most valuable tools in that race: extreme ultraviolet lithography (EUV) machines that cost >$200M a pop and are absolutely essential for advanced chips. Nvidia? TSMC? Intel? Samsung? They all rely on ASML.
The Street expects 2025 EPS to reach ~$25, a 14% increase from 2024’s $21.84. Honestly? I think that’s conservative. With ASML's expanding installed base, growing services revenue, and long-term pricing power, it’s likely we’ll see some upward revisions post-call.
Valuation-wise, $ASML trades near historical lows, below 30x forward earnings mark. That’s unusually cheap for a company with a near-monopoly in EUV lithography. A 30x multiple on 2025 EPS implies a fair value of ~$750, or ~11.5% upside from current levels. But here’s the kicker...
Historically, it’s rare to see ASML below 30x next-twelve-months (NTM) earnings. Right now, it’s closer to 23x, a multiple typically reserved for cyclical troughs or short-term macro panic.
And this hasn’t gone unnoticed. ASML has already executed massive share buybacks during Q1 2025, taking advantage of these lower valuation levels, and they’ve done so near today’s price.
They know their own value better than anyone else.
The upcoming earnings call will no doubt be a geopolitical thermometer. But here’s the paradox: global tech tensions are actually bullish for ASML.
Let me explain.
🇪🇺 Europe wants chip independence → Buys ASML
🇺🇸 The U.S. wants to reduce reliance on Asia → Buys ASML
🇯🇵 🇮🇳 🇸🇦 Japan, India, Saudi Arabia launching local fabs → All need ASML
In a fragmented, re-shoring semiconductor world, ASML is the common denominator. Every new fab = more demand for their machines. And once those systems are installed...
And increasing Net Bookings Today = Installed Base Revenue Tomorrow:
ASML isn’t just a machine vendor anymore. Their Installed Base Management (IBM) segment, which includes services, upgrades, and maintenance, is becoming a recurring revenue engine.
Each EUV shipment plants the seed for years of high-margin annuity streams.
With net bookings rebounding strongly in Q1 2025, this line of business is poised to expand significantly over the next few years, especially as the installed base compounds globally.
Everyone’s racing to build AI chips, data centers, and custom silicon. ASML doesn’t pick winners, it just sells the tools they all need to survive. Nvidia, TSMC, Intel, Samsung, and future fab players can’t build advanced chips without EUV.
At ~23x earnings, strong net bookings, growing services, and heavy buybacks, ASML looks like a rare opportunity in a world where monopolies usually don’t come cheap.
If I were to bet, I’d bet on strong earnings tomorrow.
(Not financial advice, of course — just a quiet thought).