What’s happening with ASML and TSM stock on Wednesday?

on Jun 5, 2024
  • ASML to ship its High NA EUV machines to TSM and Samsung this year.
  • ASML is now the second-largest company by market cap in Europe.
  • Both ASML and TSM stocks are up roughly 8.0% on Wednesday.

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ASML Holding NV (AMS: ASML) will reportedly ship its High Numerical Aperture Extreme Ultraviolet lithography to Taiwan Semiconductor Manufacturing Co Ltd in 2024 (TAI: 2330).

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Here’s what it means for TSM stock

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The $377 billion behemoth based out of Veldhoven, Netherlands will deliver its latest chipmaking system to Samsung as well this year. 

Note that TSM and Samsung are two of the largest customers of ASML at writing. The two companies will use its High NA EUV to make the advanced, more sophisticated chips for AI applications. 

The news was first reported by Bloomberg that cited Roger Dassen – the chief financial officer of ASML’s recent call with analysts. 

In April, ASML reported a 21.6% hit to net sales and an even bigger 37.4% decline in net income for its first financial quarter due to weaker demand for consumer electronics including smartphones. 

The semiconductor giant did, however, left its guidance of the full year unchanged at the time. ASML stock is now up nearly 50% versus its year-to-date low. 

ASML stock has over 20% upside from here

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ASML Holding NV is now the 2nd-largest company by market cap in Europe. Each of its High NA EUV costs around $380 million and weighs as much as two Airbus A320s. 

Last month, Kevin Zhang – senior vice president of Taiwan Semiconductor lauded the capability of ASML’s latest machines but expressed discomfort related to their sticker price. Still, analysts at Jefferies expect $TSM to use High NA EUV at the A14 node in 2028, as per Bloomberg. 

ASML expects its net sales to remain roughly unchanged on a year-over-year basis in 2024. It ended last year with €27.6 billion worth of sales. According to the company’s CFO Roger Dassen:

I think by 2025, you will see all three coming together. New fab openings, strong secular trends and the industry in the midst of its upturn.

Wells Fargo analyst Joseph Quatrochi continues to recommend owning ASML stock. His $1,150 price target suggests more than 20% upside from here. He’s bullish because the European firm is the world’s sole maker of extreme ultraviolet lithography equipment. 

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