ASML earnings preview: Set for fresh all-time highs?

• ASML ↑ over 40% year-to-date

• Shares could move 5.7% % ↑ or ↓ post-earnings    

• Machinery bookings & forward guidance in focus

• Technical levels – 1120 and 1000

Shares of ASML have been on a tear this year, surpassing the $1000 and €1000 milestone across both exchanges.

Note: ASML shares can be traded on the Euronext Amsterdam and Nasdaq exchanges. 

Its position as the world’s leading manufacturer of chip-making equipment has allowed it to benefit from the A.I. frenzy with shares up over 40% year-to-date.

Prices could push higher depending on how investors react to the latest earnings report.

• When will earnings be published?

ASML will report its earnings for the second quarter before US markets open on Wednesday 17th July.

• Market expectations:

The company is expected to post earnings of €3.74 compared to €4.93 a year ago.

Quarterly revenues are seen falling to €6 billion from €6.9 billion in the prior year – equating to a 13% decline.

• Why is this important?

As a leading manufacturer of chip-making equipment, its earnings and forward guidance may serve as a gauge for the AI hype. 

In the first quarter, ASML disappointed investors with revenues declining by 21% year-over-year to €5.3 billion. While sales are expected to fall in Q2, much focus will be on net machinery bookings which are estimated to be around €4.56 billion. Still, growing demand for AI Chips may translate to a significant increase in new orders.

• Potential challenges…

China is ASML’s biggest market, accounting for 49% of total sales in the first quarter of 2024.

However, this may be impacted by Dutch licensing requirements and US export restrictions. A noticeable decline in total sales in China may weigh on the business outlook.

• How will ASML react to earnings?

Markets are forecasting a 5.7% move, either Up or Down, for ASML stocks on Wednesday post earnings. 

• What does this mean for prices?

A 5.7% move up from $1062 will take ASML shares to fresh all-time highs beyond $1120.  

While a 5.7% move down will send prices back towards the psychological $1000 level.

• Keep an eye on TSMC's earnings

Watch out for Taiwan Semiconductor Manufacturing Company (TSMC) which is due to release its earnings on Thursday 18th July. 

TSMC accounts for 28% of ASML’s revenue, so better-than-expected earnings from TSMC may boost ASML’s shares and vice versa.

• Technical picture

Prices are firmly bullish on the daily charts as there have been consistently higher highs and higher lows.

• A solid set of earnings and forward guidance that satisfies investors could push prices to all-time highs beyond 1120.

• If the manufacturer of chipmakers disappoints, prices could slip back towards the 1000 psychological level.