The Semiconductor Slump: Is ASML a Buy?
The world is awash in semiconductors, with companies spending tens of billions of dollars to build new computer chips for the artificial intelligence (AI) boom. However, one of the leading equipment makers for semiconductors, ASML, has seen its stock plummet despite the insatiable demand for semiconductors.
A Cyclical Market
The semiconductor equipment market is cyclical, and ASML is currently going through a down cycle in every other segment besides AI. This has resulted in low orders and reduced projections for 2025 revenue growth. However, this doesn’t mean the semiconductor market is done growing over the long term. In fact, ASML expects spending to rise by an average of 9% per year through 2030.
A High-Quality Company at a Discount
ASML’s stock has fallen significantly, making it a potential buy for investors. The company’s cutting-edge technology, including its extreme ultraviolet lithography (EUV) technology, makes it the sole source for manufacturers looking to make the most advanced semiconductors. With a sizable backlog, ASML’s revenue is expected to grow at a double-digit rate through the end of the decade.
A Dividend Powerhouse
Unlike other hypergrowth and cutting-edge technology companies, ASML provides dividend payments to fuel total returns. The stock’s dividend has grown by 710% in the last 10 years, and management has expressed its desire to continue growing the dividend and repurchasing stock.
A Potential Stock Split
With its price approaching $1,000 a share, ASML is a likely candidate for a stock split in the next few years. This could make the stock more attractive to investors and potentially drive up its price.
Is ASML a Buy?
While ASML’s stock has fallen significantly, it still looks like a fine stock to buy at these prices. With its high-quality technology, growing dividend, and potential for a stock split, ASML could provide significant returns for patient investors. However, as with any investment, it’s essential to do your research and consider your options carefully before making a decision.
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