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ASML (NASDAQ:ASML) just crushed expectations with a 169% surge in Q4 net bookings, raking in 7.09 billionnearly double what analysts predicted. Investors shrugged off concerns about Chinese AI startup DeepSeek, which recently rattled the semiconductor space with its low-cost model. CEO Christophe Fouquet isn't worried. In fact, he sees it as a long-term win, arguing that more accessible AI means more chips, not fewer. ASML stock jumped 6% this morning on the news, proving that Wall Street still backs the Dutch chipmaking giant despite growing uncertainty in the AI arms race.
That said, risks are piling up. ASML's high-end extreme ultraviolet (EUV) machinesresponsible for 3 billion in bookings last quartercould take a hit if AI training shifts to cheaper, less advanced chips. Meanwhile, geopolitical pressures are mounting. With U.S. trade restrictions tightening, ASML expects China's share of revenue to drop from 41% in 2024 to just 20% this year. Fouquet remains confident, but the semiconductor industry is moving fast, and ASML will need to navigate shifting AI demand, evolving tech trends, and the looming risk of tougher U.S.-China trade policies.
Despite the uncertainty, ASML is doubling down. Fouquet insists that AI's long-term expansion will fuel demand across industries, from data centers to smartphones and beyond. Analysts like Morningstar's Michael Field believe the stock is undervalued, with a fair price of 850 per sharewell above its current levels. With a 36 billion backlog and steady revenue projections of 30-35 billion for 2025, ASML is positioning itself as the backbone of the AI-driven chip boom. The big question now: can it stay ahead of the curve as AI reshapes the semiconductor game?
This article first appeared on GuruFocus.