ASML Stock Rises on Hopes of Shaking Off Chip Ban Woes
ASML Holding has reported positive earnings and little impact from the U.S. chip ban. Here's why ASML stock may be a winner among chipmakers.
Ever since the U.S. government imposed curbs on selling chips to China, chipmakers have struggled to stay elevated. The policy has sent negative shockwaves throughout the industry, pushing many leading semiconductor stocks down. Despite some volatility earlier this week, though, many are back on the rise now. In particular, ASML Holding (NASDAQ:ASML) stock is leading the charge.
Based in the Netherlands, ASML is one of Europe’s largest chip equipment suppliers and the “third-largest semiconductor wafer front end (WFE) equipment supplier worldwide.” Recently, the company reported third-quarter earnings and beat sales estimates, posting revenue of $5.6 billion. This news is sending ASML stock into the green today. As of this writing, shares are up more than 7%.
This isn’t the only good news from ASML, however. The company has also reported that it has only seen a “fairly limited” impact from the U.S. chip ban. CFO Roger Dassen recently noted that ASML’s products contain little U.S. technology. Financial Times also reports that, while ASML is working to comply with regulations, it was still able to ship non-extreme ultraviolet lithography (EUV) equipment from Europe to China as it “evaluated the latest US export controls.”
Let’s take a closer look at the industry landscape and what investors can expect from ASML stock.
What’s Happening With ASML Stock?
Like its peers, ASML stock has struggled lately amid macroeconomic headwinds pushing down the entire semiconductor sector. But today’s news should remind investors that some companies are more capable of shaking off industry turbulence than others, even in the face of a raging bear market.
Coverage of chip stocks is often dominated by companies like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD). But while these names don’t always win praise from experts, ASML has been consistently hailed as a long-term play on the chip industry. InvestorPlace contributor Josh Enomoto notes that, although ASML stock is sometimes contained by geopolitical factors, its “one-of-a-kind business” puts it at a clear advantage. Others point to ASML’s EUV machine monopoly, which has given the company a unique and lucrative niche. Now, the fact that ASML doesn’t rely on U.S. tech alone gives it another leg up.
Back in August, Enomoto predicted that markets would see significant demand for ASML’s lithography specialty. That forecast may be coming true as well. According to CNBC, CEO Peter Wennink recently stated that the company is seeing “diverging demand dynamics per market segment.” However, the CEO noted that overall demand for its systems is still strong. Wennink doesn’t seem too concerned about the U.S. chip ban, either:
“Based on our initial assessment, the new restrictions do not amend the rules governing lithography equipment shipped by ASML out of the Netherlands and we expect the direct impact on ASML’s overall 2023 shipment plan to be limited.”
This all comes at a time of rising uncertainty and supply-chain concerns. Despite the state of the semiconductor industry, ASML has reported strong results and demonstrated a clear ability to withstand the headwinds that threaten its competitors. Of course, the future of the sector remains unclear. But ASML stock appears well-positioned to maintain a top spot.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.