ASML is still in a solid position to support the Magnificent Seven, but recently, one investment firm took a significant turn regarding its stance on the stock.
Shares of ASML, a leading player in lithography, rose about 9% by midday Friday. This surge is largely attributed to Alethea Capital doubling its price target from $750 to $1,500, alongside an unexpected change in their rating from “sell” to “buy.” Given ASML’s current trading status, this new target suggests a potential increase of around 30%.
Today’s changes
(8.85%) $94.64
Current price
$1164.50
Key data points
Market capitalization
$415 billion
Daily range
$1132.86 – $1172.87
52 week range
$578.51 – $1172.87
Volume
181K
Average volume
1.4M
Gross profit
52.70%
Dividend yield
0.69%
ASML: Powering the Magnificent 7
ASML holds a significant market share in the deep ultraviolet (DUV) lithography sector and practically dominates the extreme ultraviolet (EUV) lithography niche, making it one of today’s crucial players, especially within the semiconductor supply chain. Lithography—essentially, the process of engraving minuscule patterns on silicon wafers to create advanced semiconductor chips—is where ASML excels.
Image source: ASML.
ASML may not be a name everyone recognizes, but I think it really stands out when you consider its significance. If its technology were to vanish, I’d guess the Magnificent Seven would struggle significantly, particularly regarding their AI initiatives. Alethea Capital’s reasoning for adjusting their stock forecast aligns well with ASML’s critical role in relation to the Magnificent Seven and the broader semiconductor industry.
Alethea points out that Taiwan Semiconductor Manufacturing Company plans to expand its manufacturing by 40% to 50% by 2027, which will likely serve as a major boost for ASML, being a crucial supplier for that growth. The firm also anticipates that ASML could potentially ride the wave of AI advancements to drive EUV growth to between 60% and 70% by 2027.
Though ASML features a relatively high forward price/earnings ratio of 38, its competitive edge in lithography and growth prospects probably justify that premium.
