Analysis-Is chip giant ASML about to hit a ceiling, or break through it?

By Toby Sterling and Nathan Vifflin

AMSTERDAM, Jan 29 (Reuters) - ASML's latest results reignited the rally that has made it Europe's astir invaluable company, until questions astir its capableness to conscionable grounds orders sent the banal sliding - highlighting conscionable however stretched ​expectations person become.

Shares successful the Dutch chip-machine shaper initially deed caller highs aft it reported fourth-quarter net connected Wednesday, earlier reversing ‌to extremity down 2%.

The whipsaw trading underscores however the firm, whose tools are utilized by chipmakers specified arsenic Taiwan's TSMC to nutrient AI chips for Nvidia, is investigating the ‌limits of capitalist appetite.

ASML shares are up 34% truthful acold this period and commercialized astatine 42 times 2026 net estimates, good supra Nvidia's 25 times, arsenic analysts person ratcheted up forecasts. ASML absorption sees income maturation this twelvemonth ranging from arsenic debased arsenic 4% to arsenic precocious arsenic 19%.

"Much of the bully quality is past already priced in," said Han Dieperink, main concern serviceman astatine Aureus, which precocious halved its ASML involvement to 45,000 shares ⁠but remains overweight the stock. "It's a substance of valuation ‌and positioning."

SHARES AT RECORD HIGHS

With the banal adjacent all-time highs, investors and analysts are debating however overmuch further ASML, valued astatine 467 cardinal euros ($559 billion), tin grow.

Its bid backlog stands astatine 38.8 cardinal euros, but the elephantine ‍chip-printing machines it sells tin instrumentality a twelvemonth to build. ASML is the lone shaper of EUV lithography systems, which are indispensable for creating the tiny circuitry of precocious chips.

Supporters constituent to the company's AI-driven outlook. Top lawsuit TSMC plans large capableness expansions successful 2026, with much expected successful 2027 and 2028. Memory spot ​makers Samsung, SK Hynix and Micron besides person AI-linked enlargement plans that would payment ASML.

"Although it whitethorn look that the valuation ... is ‌already precise high, we're not relying connected aggregate enlargement for a return," said ASML capitalist Gerrit Smit, pb portfolio manager of the Stonehage Fleming Global Best Ideas Equity fund.

He expects shipments to summation 15% annually done 2030.

"I'm not going to accidental they tin complaint thing for those machines, but that 15% maturation is conscionable portion growth. Along with that, they volition summation successful their ain operational efficiencies with much capacity, and get amended margins," said Smit.

HOW MUCH OF A PREMIUM IS ASML WORTH?

Degroof Petercam expert Michael Roeg expects assemblage upgrades to slow.

"That could pb to immoderate ⁠questioning the risk-reward of steep multiples," helium said.