By ForexTime
- 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.
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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.
Article by ForexTime
ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com
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