We recently published a list of 10 Best Long Term Tech Stocks to Buy Right Now. In this article, we are going to take a look at where ASML Holding N.V. (NASDAQ:ASML) stands against other best long term tech stocks to buy right now.
As per Deloitte, amidst uncertainties and economic turbulence, the broader technology industry can see growth in 2025, courtesy of elevated IT spending, AI investments, and a strong emphasis on innovation. Some analysts expect that global IT spending is expected to grow by 9.3% in 2025, with data center and software segments anticipating to increase at double-digit rates. Notably, worldwide spending on AI is projected to increase at a CAGR of 29% from 2024 to 2028.
Spending To Go Northwards, Says S&P Global
S&P Global sees global IT spending to increase by 9% in 2025, reflecting an improvement from the low 8% area in 2024, with AI spurring massive data center spending and enterprises renewing their investments in traditional hardware. The enterprises have been entering 2025 with a transition to the cloud, and they are slowly accelerating their investments in GenAI projects. The rating agency opines that hardware spending is expected to improve significantly in 2025.
The server shipments are expected to increase ~4% but revenue growth will be significantly higher considering high AI server ASPs. The firm sees network equipment and mobile telecom equipment makers returning to growth while storage sales are expected to grow ~4%. Hyperscale cloud providers are expected to sustain strong revenue growth of over 20%, and the rest of IT services can recover with a growth of ~5% after lackluster performance over the previous 2 years. S&P Global sees this recovery due to the early signs of demand stabilization during Q2 2024 and Q3 2024, with several IT service providers reporting growth in bookings for large transformation projects and improving annual contract values in critical verticals.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Key Trends for 2025
In 2025, Capgemini expects AI and GenAI to have a significant impact on companies’ priorities and also on several adjacent technology domains, including robotics, supply chains, and tomorrow’s energy mix. Autonomous intelligent systems continue to be more prevalent in performing certain tasks. The next step will be the rise of a ‘super-agent,’ who can orchestrate and optimize several AI systems. In 2025, such advancements are expected to allow new AI ecosystems throughout industries.
The businesses have been navigating complex and unpredictable market conditions. As per Capgemini, technologies such as AI, data, blockchain, IoT, and connectivity with terrestrial-satellite networks can help enhance cost efficiency, resilience, agility, and sustainability of supply chains. Furthermore, additional regulatory and environmental constraints are expected to make this pivot important to ensure competitiveness, agility, and resilience.
Our Methodology
To list the 10 Best Long Term Tech Stocks to Buy Right Now, we used a screener to shortlist the stocks catering to the broader technology sector. Next, we filtered out the ones that have at least 10%-12% revenue growth over the past 10 years and are popular among hedge funds. Finally, the stocks are arranged in ascending order of their hedge fund sentiment, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a clean room working on a semiconductor device, illuminated by the machines.
ASML Holding N.V. (NASDAQ:ASML)
10-Year Revenue Growth: ~17%
Number of Hedge Fund Holders: 86
ASML Holding N.V. (NASDAQ:ASML) is engaged in developing, producing, marketing, selling, and servicing advanced semiconductor equipment systems for chipmakers. Analyst Krish Sankar of TD Cowen maintained a “Buy” rating on the company’s stock. As per the analyst, ASML Holding N.V. (NASDAQ:ASML)’s outlook for 2025 is positive, with expected sales growth and strong expansion in critical areas like EUV and services. Additionally, the company’s diversified customer base and ongoing technology advancements offer a healthy foundation for continued growth. Elsewhere, Bank of America Securities analyst Didier Scemama reiterated the bullish stance on the company’s stock, giving a “Buy” rating.
Scemama believes that ASML Holding N.V. (NASDAQ:ASML)’s long-term revenue prospects are strengthened by expected growth in the AI accelerator chip market. The expected expansion can fuel the company’s revenue prospects. Overall, the semiconductor industry continues to witness a period of significant transformation, fueled by higher demand for AI capabilities and a push towards more advanced manufacturing nodes. Therefore, with strong growth expected in the technology industry due to AI, high-performance computing, and increased semiconductor demand, ASML Holding N.V. (NASDAQ:ASML) is well-placed to witness expansion as chipmakers continue to invest in advanced lithography equipment.
Impax Asset Management, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“ASML Holding N.V. (NASDAQ:ASML) (Efficient IT, Netherlands) similarly to other semiconductor production-equipment makers, the share price has been under pressure on speculation the US may impose additional restrictions on China’s access to semiconductors and equipment. In addition, Intel’s results raised investors’ concerns that ASML would be disproportionately affected by a cutback on capex at Intel, which is a significant customer. The investment team believes these concerns are largely overblown given ASML’s dominant position in extreme ultraviolet (EUV ) lithography for advanced chips, which is where current investment is focused.”
Overall, ASML ranks 10th on our list of best long term tech stocks to buy right now. While we acknowledge the potential of ASML as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
