1. ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders In Q2 2024: 81
Shares Short % Of Outstanding: 0.27%
ASML Holding N.V. (NASDAQ:ASML) was until very recently the most valuable company in Europe in terms of market capitalization. This fact alone underscores its importance in the global semiconductor industry. ASML Holding N.V. (NASDAQ:ASML) commands a virtual monopoly when it comes to the latest chip manufacturing equipment. Its EUV and High NA EUV machines are some of the most sought products in the world, and without them, companies like Intel and TSMC can not make and sell the most advanced chips ever made. Yet, ASML Holding N.V.’s (NASDAQ:ASML) exposure to the highly cyclical chip industry which is often vulnerable to over and under-ordering leaves it vulnerable to reduced spending. This was also the case in October when its shares dropped by a whopping 21.6% in October when its 2025 guidance of spending by chip manufacturers spooked investors.
ASML Holding N.V.’s (NASDAQ:ASML) management commented on the state of the semiconductor industry during the Q3 2024 earnings call. Here is what they said:
“All-in-all, we have seen continued momentum EUV technology and we are progressing well relative to customer expectations. With regards to market condition, while we continue to view AI as a key driver of the industry recovery with potential upside, we see other segments recovering more slowly than anticipated. The recovery will extend well into 2025, which is leading to customer cautiousness and some push outs in their investment. In logic, the slow recovery of end markets such as mobile and PC, together with specific competitive foundry dynamics, as resulted in a slower ramp of new nodes at certain customer who are as a results pushing out some of their fabs and changing their litho demand timing. In memory, the slower market recovery is also resulting in limited capacity addition with the focus still on technology transition, supporting the high bandwidth memory and DDR5 AI related demand.
And finally, we expect the China business to go back to a more normalized percentage of our business in line percentage of China business in our backlog. In summary, while the long-term trends are still very strong and positive, the developments over the past few months combined with customer specific circumstances has led to a reduced growth curve in 2025 and an over overall reduction of our lithography demand. Due to this dynamics over the last quarter, we felt it’ll be appropriate to make some comments on 2025 at this time versus waiting until our Investor Day next month.”
ASML is a semiconductor stock that institutional investors are piling into according to Jefferies. While we acknowledge the potential of ASML as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. 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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