We recently compiled a list of the 10 Stocks Set to Explode in 2025. In this article, we are going to take a look at where ASML Holding N.V. (NASDAQ:ASML) stands against the other stocks set to explode in 2025.
“Big Technology are The New Defensives” Strategist Says
As the Magnificent Seven continues to release earnings for the fiscal third quarter of 2024, investors are keen to see if the group can maintain their market leading position and exemplary performance. On October 25, Nancy Tengler, Laffer Tengler Investments CEO & Chief Investment Officer, appeared in an interview on Yahoo Finance to share her market thesis on big tech amid current market conditions.
Tengler suggests that names in big technology boast reliable earnings growth, fitting the basic criteria of such. She adds that she would much rather own big tech names than invest in traditional defensive stocks despite a sluggish economic backdrop. Tengler reiterates her bullish stance on the sector claiming that big technology names are the new defensive and hold much stronger positions in the market.
READ ALSO 10 Oversold Tech Stocks To Buy Right Now and 8 Unstoppable Stocks That Could Make You Richer.
She emphasized that these names have large cash flow reserves, oftentimes, bigger than most countries. Tengler highlights that she is not bullish on all of the names in the magnificent seven and stresses that she has expanded her exposure to the tech sector, adding new stocks to her portfolio. However, at the same time, there are several names within the magnificent seven that cannot be ignored or argued against. She also suggests that investors must seek to invest and own a select few among the group, instead of owning all of them.
She shares that she was previously pessimistic about certain names she held and emphasized that she will focus on margins for certain stocks among the Mag Seven moving forward. Tengler also adds that while these companies have been criticized for pouring billions into capital expenditures, certain names are expected to benefit immensely from AI monetization and their unique cloud services and products.
While many characteristics define exploding stocks, some key traits involve an expanding customer base, improving monetization of offerings, increasing cash flows, and strong fundamentals. Biotech, electric vehicles, artificial intelligence, and cloud are among the few high-growth markets expected to blow up in the coming years. Within these sectors, certain names have been performing exceptionally well in the current market rally and are expected to outperform in 2025. That said, let’s take a look at the 10 stocks set to explode in 2025.
Our Methodology
To come up with 10 stocks set to explode in 2025, we consulted financial media to shortlist stocks that are expected to perform exceptionally well according to analysts and strategists. After consulting 10 similar rankings on the internet we examined the Street-High upside for each stock and picked the ones with the highest upside, as of October 27, 2024. Our list is in ascending order of the street high upside as of October 27, 2024. We have also mentioned the hedge fund sentiment for each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician soldering a semiconductor chip, emphasizing the power of the company’s products.
ASML Holding N.V. (NASDAQ:ASML)
Street High Upside as of October 27, 2024: 61%
Number of Hedge Fund Holders: 81
ASML Holding (NASDAQ:ASML) is a semiconductor equipment company headquartered in the Netherlands. Foundries use ASML’s extreme ultraviolet (EUV) lithography machines to manufacture AI chips.
In the third quarter of 2024, ASML Holding (NASDAQ:ASML) generated EUR 7.5 billion in sales and EUR 2.1 billion in net income. Revenue growth came from the demand for DUV and installed base management sales. In Q3, ASML reported net bookings worth EUR 2.6 billion, of which EUR 1.4 billion comprised EUV. For the fiscal fourth quarter of 2024, the company expects net sales to reach between EUR 8.8 billion and EUR 9.2 billion, with full-year revenue reaching EUR 28 billion.
ASML Holding (NASDAQ:ASML) expects to increase its capacity and improve its technology to meet the surging demand for chips in 2025, expecting sales to range between EUR 30 billion and EUR 35 billion. The company has an 83% market share in lithography, explaining why 81 hedge funds were bullish on the stock at the end of Q2 2024.
According to the company’s CEO, semiconductor inventory and litho tool utilization levels have consistently improved over the past few months for both logic and memory customers, however, the company expects EUV demand to grow rather gradually.
Polen Capital Polen International Growth Strategy stated the following regarding ASML Holding (NASDAQ:ASML) in its fourth quarter 2023 investor letter:
“Netherlands-based ASML Holding N.V. (NASDAQ:ASML) and Japan-based Lasertec play dominant roles within different segments of the global semiconductor industry. In both cases, shares rallied significantly in the fourth quarter of 2023, prompting our positions to grow as a percentage of the overall portfolio. We believe both companies will see demand for their products as extreme ultraviolet (EUV) lithography and soon high-numerical aperture lithography must be utilized to manufacture the world’s smallest chips. However, in our estimation, 2024 could deliver a year of less exciting growth for the semiconductor industry, which prompted us to trim these positions back.”
Overall ASML ranks 7th among the 10 stocks set to explode in 2025. While we acknowledge the potential of ASML as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ASML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.