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ASML Holding NV (NASDAQ:ASML), the leading supplier of equipment to computer chip manufacturers, has exceeded second-quarter earnings forecasts, driven by robust sales in China and a surge in new bookings.
What Happened: The Dutch company reported a second-quarter net income of 1.6 billion euros ($1.75 billion) on revenues of 6.2 billion euros ($6.77 billion), surpassing analysts’ expectations of 1.41 billion euros on revenue of 6.04 billion euros, Reuters reported on Wednesday.
The new bookings for the quarter stood at 5.6 billion euros ($6.11 billion), a significant increase from the 3.6 billion euros in the first quarter of 2024.
Christophe Fouquet, the new CEO, described 2024 as a “transition year,” with the company’s performance expected to remain flat as it gears up for a strong 2025. He attributed the industry’s recovery and growth to significant advancements in AI.
Despite the impressive figures, the second-quarter numbers were lower than the same period in the previous year, when net income was 1.94 billion euros and sales were 6.90 billion euros.
Analysts had anticipated ASML to exceed estimates with over 5 billion euros in orders during second quarter, thanks to the escalating demand for AI chips, as noted by Kevin Wang, an analyst at Mihuzo.
The surge in new orders is primarily fueled by strong demand from leading chip manufacturers, including Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), which produces chips for NVIDIA Corp (NASDAQ:NVDA) and Apple Inc. (NASDAQ:AAPL).
Why It Matters: The strong performance comes amid escalating tensions in the U.S.-China chip war. The Eindhoven University of Technology, a significant talent source for ASML, has come under increasing scrutiny from the U.S. due to its large number of Chinese students.
Earlier this year, under U.S. pressure, the Dutch government imposed restrictions on exports of ASML's immersion DUV lithography machines to China. Despite these restrictions, ASML has managed to secure substantial orders, driven by the rising demand for AI chips.
Additionally, the U.S. has been pressuring its allies, including Japan and the Netherlands, to tighten export controls on chipmaking equipment to China. This move is part of a broader strategy to prevent China from acquiring advanced semiconductor technology that could enhance its military capabilities.
Price Action: ASML stock closed at $1,068.19, up 0.43% on Tuesday. In after-hours trading, the stock rose by an additional 0.27%. Year to date, ASML’s stock has increased by 49.00%, according to data from Benzinga Pro.
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Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
