ASML share price forecast after earnings: buy or sell?

The ASML share price rose on Wednesday as the company published strong financial results that demonstrated demand in the artificial intelligence industry. It was trading at €846, up by about 67% from its lowest point this year, giving it a market capitalization of over €337 billion. 

ASML earnings download

ASML is a top company in the technology industry that makes large equipment used to manufacture computer chips. It is the only company with the capacity to manufacture lithography tools used by firms such as TSMC, Global Foundries, and Intel in their manufacturing processes. 

ASML has benefited substantially from the ongoing artificial intelligence (AI) boom that has led to a substantial increase in chip demand. 

The company’s results, which were published today, showed that the company made €5.4 billion in bookings in the third quarter, higher than the average estimate of €4.9 billion. 

Read more: Mistral AI secures €1.7 billion as ASML becomes top backer

Its total sales jumped to €7.5 billion in the quarter. It now expects that the fourth quarter revenue will be between €9.2 billion and €9.8 billion, with its gross margin being between 51% and 53%. 

ASML has continued to reward its shareholders. It declared an ordinary dividend of €1.6 per share and repurchased shares worth about €148 million. It has already repurchased shares worth about €5.9 billion in the ongoing €12 billion program. In a statement, the management said:

“In line with our plans to support our customers in the 3D integration space, we shipped ASML’s first product serving Advanced Packaging, the TWINSCAN XT:260, an i-line scanner offering up to 4x productivity compared to existing solutions.”

ASML is fairly valued

ASML stock price has done well in the past few years as demand from the industry soared. This demand will likely continue after the recent announcements in the AI industry. 

For example, Broadcom has reported a backlog of over $455 billion. Nvidia has announced a $100 billion investment in OpenAI, while OpenAI has announced a big investment in AMD. 

Data shows that the company is fairly valued considering its important role in the AI industry. The company has a forward price-to-earnings (P/E) ratio of 35, and a PEG ratio of 0.88. 

ASML share price technical analysis

The daily chart shows that the ASML stock price has rebounded in the past few weeks, moving from a low of €500 in April to €840 today. 

It formed an inverse head-and-shoulders pattern, which is a common bullish reversal sign. It has moved above the important resistance at €742, the pattern’s neckline. 

The stock has also formed a golden cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other. It has also formed a bullish flag pattern and moved above the 61.8% retracement point. 

Therefore, the stock will likely continue rising as bulls target the psychological point at €1,000. A drop below the support at €814 will invalidate the bullish view.

The post ASML share price forecast after earnings: buy or sell? appeared first on Invezz