ASML has made a strong start to 2025, with its shares rising over 7% since the beginning of the year, outpacing its US semiconductor counterparts and signaling a potential shift in investor sentiment towards European stocks. The rally in ASML shares comes at a time when US markets are grappling with a broad selloff, partially fueled by growing concerns ahead of Donald Trump’s upcoming inauguration.
European Markets Gain Momentum
ASML’s impressive performance reflects the broader positive trend in European stock markets, which have begun the year on a high note. All major European benchmarks are in the green, with Germany’s DAX leading the way, up 1.54% year-to-date. This contrasts sharply with negative returns in US equities, which have stalled since late December following the Federal Reserve’s hawkish rate stance. Concerns over Trump’s promises to raise tariffs on global imports have added to inflation fears in the US, contributing to a sharp rise in government bond yields. This has led to declines in major US stock indices, with the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all posting negative performances to start 2025.
ASML’s Dominance in Semiconductor Equipment
While the broader rally in European equities may have supported ASML’s rise, the company’s near-monopoly status in the semiconductor equipment market is a significant factor behind its outperformance. ASML is the world’s exclusive manufacturer of extreme ultraviolet lithography (EUV) systems, which are crucial for producing the most advanced chips, including those used in AI technologies. With the ongoing demand for AI chips, analysts have positioned ASML as one of the top picks in the semiconductor sector.
Earnings per share for ASML are expected to grow by 26% in 2025, after an estimated decline of 4% in 2024. The company remains optimistic about long-term prospects, forecasting revenues between €44 billion and €60 billion by 2030, with gross margins ranging from 56% to 60%.
Trade Tensions and Export Restrictions
However, ASML’s outlook is not without challenges. Trade tensions between the US and China continue to pose risks, particularly with the US government preparing new export restrictions targeting AI chips. These restrictions could affect ASML’s sales to China, which has been a major market for the company. ASML recently canceled shipments of certain chip-making machines to China, following new export control regulations from both the US and Dutch governments.
Despite these challenges, ASML has expressed confidence that the impact on its business will be limited. The company maintains that the outlook for 2025 remains positive, even as it lowers expectations for China’s contribution to its revenues, projecting it will drop to around 20% from nearly half in previous years.
Overall, ASML’s strong performance to begin 2025 and its leading position in the semiconductor industry highlight its resilience amid global trade uncertainties.
