ASML’s fourth-quarter sales grew by 24% to €9.3bn, narrowly exceeding the top end of company guidance. This was driven by better-than-expected revenues derived from the company’s installed base of semiconductor manufacturing equipment.
Operating profit rose 40% to €3.4bn, fuelled by the top line growth and improved profitability in its installed base management due to lower-than-expected set-up costs.
Free cash flow jumped from €2.6bn to €8.8bn largely reflecting the favourable timing of receipts and payments.
Guidance for first-quarter sales is €7.5bn-€8.0bn. For 2025, the company continues to expect sales in the range of €30-35bn.
ASML intends to declare a total dividend for the year 2024 of €6.40 per ordinary share, an increase of 4.9%.
The shares rose 10.8% in early trading.
Our view
ASML’s robust fourth-quarter results were received well by the market. Lately investor sentiment has suffered after the emergence of Chinese Artificial Intelligence engine DeepSeek cast doubts over the demand picture for high end computer processors. There’s been no changes to guidance so far and we remain positive around the long-term picture. But it does raise some uncertainty around the pace of adoption for ASML’s most advanced machines.
Netherlands-based ASML is the market leader in lithography machines used to make semiconductor chips. Without these, you wouldn't have the chips that power the latest phones, computers or even cars. It continues to push the boundaries of the most advanced tech and competitors look a long way off catching up.
ASML’s dominant position and technical expertise allow it to bank a sizeable chunk of revenue into profit. There’s room for profitability to improve further as services and upgrades for the installed base of machines become a more important part of the picture.
Recently lowered guidance for 2025 reflects the slow recovery in consumer electronics and the reassessment of investment plans by some key chip manufacturers. Over the longer term, the company is well-placed to benefit from structural growth drivers such as artificial intelligence, increasing data volumes, and the energy transition.
These trends support management’s outlook, implying annual revenue growth of about 10.7% through the end of the decade. The order book stands at around €36bn which is a solid start towards reaching those targets. But getting there will require further meaty capital commitments from chip manufacturers.
The sector has a strong track record of investing and innovating for the future. Current technological shifts have the potential to drive a step change in that activity. ASML’s ability to help its customers earn a higher return on their investment is a key selling point. But predicting the pace at which new technologies are adopted is no easy task. Monitoring order intake is therefore critical to ensure the backlog is replenished and growth remains on track.
Equipment sales to China are also an area in focus, given the region accounted for around 40% of shipments last year. Further US and Dutch restrictions on exports weren’t a surprise, and 2025 guidance has factored in a reduced contribution to revenue from Chinese sales. However, the geopolitical environment is moving very quickly, and it remains a key risk to monitor.
Overall, we think ASML's dominant market position leaves it well-placed to benefit from long-term growth trends in the semiconductor industry. The valuation doesn’t look overly demanding and the strong balance sheet should help to ride out peaks and troughs in demand. But while concerns persist about the expansion plans of its end customers, further volatility is to be expected.
Environmental, social and governance (ESG) risk
The semiconductor sector is medium-risk in terms of ESG. Overall, this risk is managed adequately in Europe and North America but has considerable room for improvement in the Asia-Pacific region. Its reliance on highly-specialised workers means labour relations is one of the key risk drivers. Other risks worth monitoring include resource use, business ethics, product governance, and carbon emissions.
ASML’s management of ESG risks is rated strong by Sustainalytics. It is targeting net zero emissions across the value chain by 2040 with credible near-term targets in place for direct and indirect emissions. Its manufacturing sites have received an internationally recognised certification, which suggests a strong environmental management system. There’s also a commitment to reducing hazardous waste. ASML requires a highly skilled workforce and scores well on employee management, with turnover falling from 6% to 3.6% in 2023. Despite its dominant position it has not had any significant antitrust controversies, with its market position protected by innovation and complexity rather than anticompetitive practices.
ASML key facts
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