ASML (NASDAQ: ASML) may not get as much attention as the famous Magnificent Seven stocks, but it is still one of the world's most important companies. This semiconductor stock makes extreme ultraviolet (EUV) lithography machines. They play a vital role in manufacturing advanced chips, and the company has a near-monopoly in this equipment.
ASML recently released earnings. Many found them disappointing, even though it beat earnings per share expectations. Overall, shares dipped around 7% after the release. Over the past 52 weeks, ASML stock has had a total return of around -24% as of the Apr. 23 close.
This analysis will detail ASML’s recent earnings and the in-focus metric that influenced the drop in shares. Many expressed disappointment, but that reaction seems misplaced. It will further explain several important dynamics that make this stock attractive.
ASML: Headline Earnings Data Hits the Mark
In Q1 2025, ASML Holding N.V. reported a 46% year-over-year revenue increase, totaling approximately €7.7 billion (about $8.77 billion), aligning with market expectations. The company's earnings per share stood at €6 (around $6.31), surpassing estimates by approximately 5%.
While ASML's Q2 revenue guidance was slightly below expectations, the firm reaffirmed its full-year 2025 revenue outlook of €30 to €35 billion (approximately $33 to $38.6 billion). Overall, the headline figures indicate a solid performance. However, a deeper analysis reveals underlying concerns that contributed to the decline in share value.
Bookings Disappoint, But Context Is Essential
One of the supplementary metrics ASML reports is net bookings. This measures the value of orders received and is an indicator of future revenues. A significant disappointment came with the company reporting a whopping 44% drop in net bookings versus Q4 2024. The company reported €3.9 billion (approximately $4.45 billion) in bookings, nearly €1 billion (about $1.14 billion) below expectations. This was the biggest reason for the stock’s fall. However, these concerns seem a bit overblown, as the company’s bookings tend to fluctuate very widely on a quarterly basis. A similar pattern occurred in the same quarter last year, when bookings fell nearly 61% from Q4 2023 to Q1 2024 and also missed expectations by more than €1 billion ($1.14 billion).
Markets tend to put too much stock into the company’s bookings fluctuations, causing shares to rise or fall. The company’s Chief Financial Officer says that bookings “do not necessarily reflect our business momentum accurately." This makes sense considering the vast price of the company’s machines. Its latest EUV product costs around $380 million. Seeing the order of just one EUV machine get delayed by a quarter could mean the difference between the firm exceeding or falling short of analyst bookings expectations.
ASML has recognized this, going as far as to say that it will stop reporting bookings in 2026.
The company said it is “currently facing an elevated level of uncertainty surrounding tariffs." This may have further raised worries about bookings. Some may have thought tariffs caused the bigger-than-expected drop. However, that may be a premature conclusion. The company missed bookings expectations by a wider margin in 2024 when tariffs were not a concern. ASML’s reiterated revenue guidance is a much more useful indicator of its 2025 demand and should give investors confidence despite the drop in bookings.
ASML’s Upside Looks Palpable Despite Concerns
[content-module:Forecast|NASDAQ: ASML]In the long term, ASML remains confident in its outlook, seeing substantial growth through 2030. Compared to 2024 total revenues, the company sees revenues growing by between 50% and 105% by 2030. It also sees gross margin expanding by between 180 and 580 basis points compared to 2024. This is largely because chips should continue to get more advanced, creating a need for more advanced lithography equipment.
This can help significantly boost margins, as ASML's most advanced EUV equipment is the most expensive. This is especially true for its new High-NA EUV technology, which carries a $380 million price tag and is just starting to gain adoption, with only 5 units sold so far.
ASML is also looking to juice the returns of its stock through buybacks. On Apr. 23, it authorized a proposal to buy back up to 10% of its shares over the next 18 months. It also boasts a notable dividend yield of around 1%.
Wells Fargo and Susquehanna recently updated their price targets. On average, they imply ASML shares could rise about 37% from the Apr. 23 closing price. ASML stock looks attractive due to the firm’s strong position, big share drop, industry tailwinds, and commitment to returning capital.
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