Why this investor loves ASML Holding
Velocity Investment Partners senior wealth manager Brianne Gardner says ASML Holding (ASML Stock Quote, Chart, News, Analysts, Financials NASDAQ:ASML) could gain approximately 45% over the next six to 12 months, citing its dominant position in semiconductor manufacturing equipment and growing demand for chips used in artificial intelligence.
Speaking on BNN Bloomberg’s Market Call on Oct. 30, Gardner named ASML one of her favourite semiconductor holdings, with a price target of approximately US$2,400.
“ASML makes the machines that make the chips,” Gardner said. “So its technology is essential for producing the advanced semiconductors powering AI, and that is virtually no competition.”
The Netherlands-based company manufactures advanced lithography equipment used by semiconductor producers to make increasingly powerful and complex chips. Gardner said ASML’s technological advantage gives it a strong position as chipmakers invest in additional manufacturing capacity to meet demand from AI developers and data centres.
“The latest results were strong. Earnings beat expectations. Orders remain healthy and customers continued upgrading their machines,” she added.
Gardner expects expanding AI infrastructure investment to support continued demand for ASML’s equipment, while plans to increase production capacity could provide another source of revenue growth. However, she acknowledged that the company’s expansion plans could put pressure on profitability.
“So, yes, the stock did pull back despite good results, but investors worried about spending and whether expansion costs could put pressure on profit margins,” she said.
Gardner said those concerns do not change her longer-term outlook because ASML faces limited competition in the most advanced semiconductor manufacturing technologies. “I remain confident in the long-term story of this, and valuations is a consideration. But ASML’s unique technology and growing demand make it one of our favorite semiconductor holdings,” she said.
She also sees a favourable technical setup following the stock’s recent pullback, with shares approaching a potential support level after a strong 12-month performance.
Gardner assigned ASML a fundamental rating of 10 out of 10 and expects further gains as demand for advanced chips continues to increase.
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Rod Weatherbie
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Rod Weatherbie is a journalist based in Prince Edward Island. Since 2004, he has written extensively about the Canadian property and casualty insurance landscape. He was also a founder and contributing editor for a Toronto-based arts website and a PEI-based food magazine. His fiction and poetry have been featured in The Fiddlehead, The Antigonish Review, and Juniper.