ASML Sees Opportunities from DeepSeek

Shares of ASML traded more than 4% higher on Wednesday despite general weakness among the semiconductor industry stocks.

Shares of the VanEck Vectors Semiconductor ETF – a proxy for the semiconductor industry – traded lower for the day as NVIDIA (NVDA) dropped more than 6%.  NVIDIA is the largest weighted stock in the semiconductor ETF.

ASML’s move was higher based on the company’s better-than-expected earnings result earlier Wednesday morning.

For the quarter, the company reported earnings of €6.85 per share, surpassing the FactSet Consensus estimate of €6.72 by €0.13. 

Revenues increased significantly by 28.0% year-over-year to €9.26 billion, also beating the FactSet Consensus of €9.06 billion. Gross margins for the quarter came in at 51.7%.

Perhaps the most bullish part of the company’s report was the quarterly net bookings which amounted to €7.1 billion. 

Looking ahead, the company provided an optimistic outlook for the first quarter (Q1), projecting revenues between €7.5 billion and €8.0 billion, which is above the FactSet Consensus of €7.21 billion. The gross margin for Q1 is expected to be between 52% and 53%.

In addition, ASML’s management commented that the company sees opportunities from the recent developments surrounding DeepSeek.

ASML’s CEO commented on CNBC that “A lower cost of AI could mean more applications. More applications mean more demand over time. We see that as an opportunity for more chip demand,”

Shares of ASML have been trading in a volatile range for the last two months, trying to form a short-term bullish trend.

After posting a short-term price bottom at $650 in December, shares have made a volatile trend of new highs and new lows.  This pattern would typically present a bullish opportunity for traders.  That pattern was broken on Monday as ASML dropped back below their 50-day moving average.

Today’s move is back above the same trendline, but investors need to be worried about the stock’s moves over the next week.

A move back below $700 would be considered a bearish move to technical traders and result in increased selling pressure and volume.

From a broader view, ASML shares slid into a long-term bear market trend in October when the stock moved below its 20-month moving average.

The stock has experienced resistance at that same long-term trendline each month.  ASML’s 20-month moving average current resides at $784.

Shares of ASML are in a long-term bear market trend with a price target of $600.

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