ASML Holding NV (ASML) EUR0.09

No recommendation - No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

ASML reported first-quarter net sales of €7.7bn, in the middle of its guidance range. Net bookings of €3.9bn (€4.8bn expected) were up 9% year on year. Operating profit increased from €1.4bn to €2.7bn.

There was a free cash outflow of €0.4bn, with net cash at €5.4bn.

The outlook for 2025 is unchanged with net sales expected to be between €30-35bn, with Q2 guidance between €7.2-7.7bn (expected €7.8bn).

A final dividend of €1.84 per share has been proposed, taking the total for 2024 to €6.40, up 4.9%. In the first quarter they purchased €2.7bn worth of shares under the current 2022-2025 share buyback program.

The shares rose 1.5% in early trading.

Our view

ASML delivered a decent quarter and while full year guidance has been reiterated, confidence in the numbers was eroded a touch by weaker than expected orders and second quarter guidance.

Tariffs are dominating the headlines, and management expects ongoing uncertainty. ASML has some exposure to US manufacturing and imports/exports, but it’s relatively insulated to direct tariffs. Second order effects like inflation or recessions are probably the bigger risk. ASML is far removed from the end consumer but will still feel an impact if spending drops. It’s early days but an area to watch.

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.

Aside from tariff concerns, the market is mixed, with a 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, though we would note that 2026 guidance is based on discussions with customers and that could change quickly with how volatile things are right now. The order book stood at around €36bn at the start of the year, and while new orders disappointed, it’s still in a strong position.

The sector has a solid history of investing and innovating for the future, and current technological shifts could significantly accelerate that progress. ASML’s value lies in helping customers achieve higher returns on investment, but the pace of tech adoption is hard to predict. That makes monitoring order intake vital to maintain a healthy backlog and support growth.

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, and potential tariff impacts, 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.

According to Sustainalytics, ASML’s management of material ESG issues is strong.

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.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

Previous updates