ASML Stock: Will Wednesday’s Earnings Call Boost the ASML share price?

Demand for ASML’s high-end equipment, which is critical for making AI chips, drove record quarterly orders in Q4 2023. However, the company’s sales in the first quarter of 2024 may have been impacted by export restrictions announced in January.

In a bid to stop ASML [ASML] from moving its manufacturing overseas, the Dutch government is to invest €2.5bn to improve the infrastructure in Eindhoven, Bloomberg reported at the end of March.

“We have to come to the conclusion that we can grow responsibly in the Netherlands. And we have not yet drawn that conclusion,” said ASML CEO Peter Wennink at a technology conference last month, according to Dutch news agency ANP.

In a separate report, the newspaper De Telegraaf cited France as a possible location for ASML’s manufacturing expansion.

The final decision will rest with Christophe Fouquet, who will replace Wennink when the latter retires this month.

Four ‘super investors’ bought $278.4m worth of ASML shares in Q4 2023, while another two super investors sold a combined $227.1m.

One of the buyers was Steve Cohen, Founder and CEO of Point72 Asset Management, who snapped up approximately 204,000 shares, boosting his holding by 854.9%. Another was Ken Fisher, Founder, Executive Chairman and Co-chief Investment Officer of Fisher Investments, who increased his holding by 2%, buying 95,800 shares.

Sellers included Ken Griffin, Founder of Citadel, who slashed his holding by 57.1%, offloading approximately 33,900 shares.

ASML Receives Record Orders in Q4 2023

ASML’s net sales rose 7.5% quarter-over-quarter in Q4 2023, up to €7.2bn from €6.7bn, while net income came in at €2bn, up slightly from €1.9bn in Q3 2024.

As demand for its high-end machines ramped up, orders worth €9.2bn were placed with ASML during the last three months of 2023, more than triple the €2.6bn reported for the previous quarter.

“2023 was our top year … We won’t see another 30% growth in 2024,” Wennink told Bloomberg TV following the earnings call in January.

Sales for Q1 2024 are expected to be between €5bn and €5.5bn. Hitting the midway point on this range would represent a 21.6% drop in Q1 2023 revenue of €6.7bn.

“The relatively slow start to the year is a reflection of the current state of the industry coming out of a downturn,” said ASML Chief Financial Officer Roger Dassen on the earnings call.

Export Rules Put China Sales in the Spotlight

China is likely to be the focus for many investors when ASML reports Q1 2024 earnings on Wednesday.

Much of last year’s demand for ASML’s high-end machines came from Chinese customers keen to get their hands on them before any restrictions on deep ultraviolet (DUV) equipment came into force. The company has been banned from selling its extreme ultraviolet equipment in China.

On 1 January, ASML announced a licence to export its NXT:2050i and NXT:2100i DUV machines had been “partially revoked by the Dutch government, impacting a small number of customers in China”.

The chipmaking equipment manufacturer doesn’t expect restrictions to have a material impact on its financial outlook for 2024. However, it did previously caution in its Q4 2023 earnings that China sales could drop 10–15% as a result of any new Dutch export rules.

Investors will be hoping that the impact of the rules announced since the last earnings call won’t be more severe than expected.

ASML is an AI Play

The ASML share price has risen 45.7% in the past year through 15 April and 27.3% year-to-date. It’s up 2.3% in the past month.

As well as holding the stock outright, another way to invest in ASML is through thematic ETFs.

For example, ASML is a play on the AI theme because its equipment is critical to the manufacturing of AI chips, including Nvidia’s [NVDA] H100 chips.

The ROBO Global Artificial Intelligence ETF [THNQ] has ASML as its eighth-biggest holding, with a weighting of 2.1% as of 12 April. The fund is up 34.2% in the past year and up 2.7% year-to-date.

The WisdomTree Artificial Intelligence and Innovation Fund [WTAI] has ASML as its fifth-biggest holding, with a weighting of 2.1%. The fund is up 19.4% in the past year and down 3.4% year-to-date.