ASML: A Benevolent Opportunity Amidst Nvidia’s Astronomical Valor
Behold (NASDAQ: NVDA): a star ascending so high in the heavens of artificial intelligence (AI) that its radiance blinds the conventional investor’s lens, pushing its earthly valuation to divine levels compared to the technology sector’s more earthly financial metrics.
With Nvidia’s sales multiple of 36, surpassing the sector’s price-to-sales ratio of 7.2 and trailing earnings multiple of 73 overshadowing the sector’s 45, the chipmaker seems to dwell in an ethereal realm far beyond the mortal realm. However, Nvidia’s forthright price-to-earnings ratio of 35 speaks of its ongoing fantastic growth, offering a semblance of justification for its otherworldly value.
AI’s Concordant Symphony: ASML Harmonizes with Growth
Yet here we find Dutch semiconductor conductor, ASML (NASDAQ: ASML), standing on a more earthly pedestal. ASML’s contribution to the AI crescendo not only offers a cost-effective entry point for investors but also plays a pivotal role in the AI overture. Its machines serve as the silent architects behind Nvidia’s graphical marvels, notably crafting the 5-nanometer roadmap for Taiwan Semiconductor Manufacturing (TSMC), the forge where Nvidia’s flagship H100 AI GPU takes shape.
TSMC, in its 5nm endeavors, is tethered to ASML’s tools, particularly the extreme ultraviolet (EUV) lithography machines, exclusively held by ASML—rendering it the master architect of EUV. This strategic monopoly situates ASML perfectly to capitalize on the burgeoning demand for advanced chip-making paraphernalia, driven by the insatiable hunger for AI chips.
Projections paint a vivid palette—depicting the EUV lithography market galloping at a compound annual growth rate (CAGR) of 22% until 2032, surging to a $63 billion annual crescendo, while the broader semiconductor equipment market could trumpet a $222 billion finale in 2032, up from $83 billion in 2022.
ASML, armed with a bulging 39 billion euro order backlog at the close of 2023—fostered by a thunderous swell in bookings—ships the narrative of this multibillion-dollar saga across the seas of innovation. The fourth quarter alone saw ASML netting 9.2 billion euros in bookings, surpassing the previous quarter’s humble 2.6 billion euros showing.
Predicted Symphony of Growth: ASML’s Orchestral Prelude
The crescendo of ASML’s order symphony crescendoed sharply, with net bookings climbing over 50% to a melodious 30.7 billion euros, up from 20 billion euros in 2022. Noteworthy is that 60% of the previous quarter’s orders were hymns dedicated to EUV sanctuaries as chipmakers vie for a seat at ASML’s innovation table, aiming to herald AI chip revelations.
A historic journey awaits ASML, charioted by its robust order cortege, promising rich and resonant growth in the coming years.
ASML Revenue Estimates for Current Fiscal Year data by YCharts
The Stock’s Cogitative Valuation: A Beacon of Promise
ASML’s melodious top-line ballads set the stage for a crescendo, with earnings projected to leap at a 22% annual cadence over the next quinary. Based on 2023’s earnings aria of $21.78 per share, ASML’s lyrical notes could dance to a tune approaching $59 per share by the curtain call in 2028.
Harmonizing the Nasdaq-100’s forward earnings polyphony of 31 with ASML’s aural prophecy unveils a stock sonnet of $1,829, a symphonic upsurge of 90% from present levels. Traded at 46 times trailing earnings and 13 times sales, ASML stands as the modestly clothed Icarus to Nvidia’s soaring Daedalus, beckoning to investors seeking a less celestial AI marvel—and one should join the serenade ere it reaches celestial heights further, following a jubilant 27% leap in 2024.
Would you entrust $1,000 unto ASML’s care?
Before embracing ASML’s financial flutists, ponder this:
The Motley Fool Stock Advisor troubadours recently unveiled what they herald as the 10 finest stocks for investors to anoint, and ASML failed to grace the list. The sanctified decalogue of stocks promised a cornucopia of returns in the epochs ahead.
Stock Advisor bequeaths investors with a charted course to prosperity, guiding them through portfolio scribing, hymnal updates from minstrels, and bi-monthly songbird stocks. Since 2002, the symphony of Stock Advisor has eclipsed the S&P 500’s harmonics thrice-fold*
Harsh Chauhan takes no stance in the refrain of stocks mentioned herein. The Motley Fool holds positions in and advises ASML, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool heeds the code of disclosure.
The views and opinions sung forth are those of the minstrel and may not necessarily be echoed by Nasdaq, Inc.
