ASML earnings report Q4 2024

Dutch semiconductor giant ASML on Wednesday reported a big jump in fourth-quarter net bookings, suggesting strong demand for its advanced chipmaking tools even as DeepSeek’s low-cost model raises concerns over AI spending.

ASML shares surged more than 11% at 8:24 a.m. London time as investor reacted to the results.

Here’s how ASML did versus LSEG consensus estimates for the fourth quarter:

• Net sales: 9.26 billion euros versus 9.07 billion euros expected.
• Net profit: 2.69 billion euros versus 2.64 billion euros expected.

ASML said that net bookings, a key indicator of order demand, came in at 7.09 billion euros.

That was up 169% from the 2.63 billion euros ASML reported in the third quarter, and exceeded the 3.99 billion euros expected by analysts polled by Visible Alpha, according to Reuters.

ASML suffered losses during a global tech sell-off earlier in the week after the rollout of Chinese startup DeepSeek’s R1 reasoning model, which claims to undercut OpenAI on both cost and performance.

The move triggered questions over eyewatering spending from the likes of leading AI players OpenAI and Microsoft on Nvidia graphics processing units, which are needed to train and run the most advanced AI models.

This could hit demand for ASML’s high-precision extreme ultraviolet (EUV) machines, which are used to print the most advanced microchips. EUV tools accounted for 3 billion euros of ASML’s fourth-quarter net bookings.

ASML CEO Christophe Fouquet struck a positive note on the arrival of low-cost AI models such as DeepSeek, telling CNBC’s Arjun Kharpal that he expects this development to drive more demand for semiconductors — not less.

While he declined to comment on specifics with DeepSeek’s R1, Fouquet said that he sees no sign of a slowdown in demand for AI-focused chips.

“A lower cost of AI could mean more applications. More applications means more demand over time. We see that as an opportunity for more chips demand,” Fouquet said in an interview Wednesday.

There is “a lot of discussion” in the industry surrounding DeepSeek, but Fouquet said ASML hasn’t heard from customers asking about the impact of the Chinese firm’s model on chip demand.

Ben Barringer, technology analyst at Quilter Cheviot, said that the earnings report offered “reassurance to the market following the turmoil due to concerns around DeepSeek.”

Michael Field, chief equity strategist at Morningstar, told CNBC’s “Squawk Box Europe” that ASML’s fourth-quarter results vindicate the view that the chip firm isn’t “overvalued” or “full of puff.” ASML is Morningstar’s top AI pick in Europe, he added.

“Genuinely, we think the numbers support the [investment] case and, actually, we think the shares are worth more like 850 (euros) — which, given the pullback you’ve seen in the last few weeks, offers a pretty good opportunity for investors,” Field said Wednesday.

ASML shares closed at 646.60 euros per share Tuesday.

Fouquet added that ASML’s expecting a rebalancing of demand in China in 2025. Over the past two years, ASML saw heightened demand for its chipmaking tools in the country as Chinese firms stocked up to get ahead of U.S. restrictions on exports of advanced semiconductor machines.

“We had a huge backlog in China, at the end of 2022, because 2022 was a year we couldn’t feed the market with all the tools the market needed. This has kind of been absorbed last year,” Fouquet told CNBC.

He added that ASML expects to return to a more “normal” demand ratio in China, compared with other markets this year.

“We expect the ratio of our business in China to be lower than what it has been for sure in 23, 24,” Fouquet added.