ASML rises 5% as outlook bodes well for chip equipment stocks
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ASML Holding (NASDAQ:ASML) rose Wednesday after the semiconductor equipment maker posted stronger-than-expected results and forecast strong sales in the coming months.
"In light of the demand and our plans to increase capacity, we expect to revisit our scenarios for 2025 and growth opportunities beyond," ASML (ASML) Chief Executive Officer Peter Wennink said in a statement.
For its second quarter, ASML (ASML) said it expects net sales to be between $5.52 billion and $5.74 billion, and gross margins in to be in a range of 49% to 50%. The company expects full-year revenue to grow 20% from its 2021 sales.
ASML (ASML), which is the world's largest semiconductor equipment maker and uses advanced extreme ultraviolet lithography equipment to make chips faster and more efficient, saw its shares rise more than 4% as trading progressed, Wednesay.
Other chip equipment makers, such as KLA Corp. (KLAC), Applied Materials (AMAT) and Lam Research (LRCX) all rose in ASML's (ASML) wake.
In a note to clients, Jefferies analyst Mark Lipacis said he favors a number of semiconductor stocks, including Applied Materials (AMAT), Lam Research (LRCX), Advanced Micro Devices (AMD) and Nvidia (NVDA), as investors get ready for earnings season.
"In 2015 and 2018, relative to the [S&P 500], the [Semiconductor Index] ultimately bottomed close to the respective mid-cycle correction level," Lipacis wrote.
"[The Semiconductor Index] is currently trading at the May mid-cycle correction recently, suggesting limited relative downside from current levels," Lipacis added.
In February, Bank of America picked ASML (ASML), among several other stocks, that could benefit from scarcity themes, with ASML being the global supplier of extreme ultraviolet equipment.