Shares of ASML Holdings (NASDAQ: ASML), the titan of semiconductor manufacturing equipment, saw a pleasant upswing today. The stock embraced the sunny side up, basking in the glow of an analyst upgrade, potential exclusion from U.S. chip export restrictions towards China, and a general chip stock rally following Advanced Micro Devices’ robust earnings report.
At 10:18 a.m. ET on Wednesday, the stock glittered with a 7.4% increase.
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ASML’s Rebound
July has been stormy for ASML. The stock stumbled in its earnings report despite surpassing estimates. Apprehensions of chip export restrictions to China from the Biden administration cast shadows over the stock. Investors seemed to be shifting gears from chip stocks to small caps.
On a brighter note, ASML received a boost today with reports from Reuters suggesting its exclusion from new export restrictions to China by the Biden administration. This news is like nectar to ASML, given that nearly half of its sales originate from China.
The chip sector also enjoyed upbeat movements after AMD’s stellar report, showcasing a 115% revenue surge in the crucial data-center segment, instilling investor faith in the artificial intelligence resurgence.
Moreover, last night, Barclays ascended ASML’s rating from equal weight to overweight, attributing the prior stock slump to an overreaction. Interestingly, this upgrade preceded the Reuters disclosure.
ASML’s Prospects
Despite today’s gains, ASML presents a tantalizing entry opportunity. With a price-to-earnings ratio below 30 based on projected 2025 earnings, the company is slated to embark on a new growth cycle later this year fueled by cutting-edge extreme ultraviolet (EUV) lithography machines.
Boasting substantial competitive edges as the sole EUV manufacturer capable of crafting intricate patterns on silicon wafers, ASML stands adeptly positioned for long-term prosperity, especially if the company dodges the new export regulations.
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