Contributor, Benzinga
January 3, 2022
$688.93
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You may have heard a lot of talk about semiconductor chip shortages and supply problems this year. And, if you did, you probably came across ASML. The company played a key role in reaction to the problem, providing significant support to chipmakers, including the hardware, software and services these firms need to mass produce patterns on silicon.

ASML is a Dutch corporation established in 1984 by founders Phillips and ASM International. It specializes in the development and manufacturing of photolithography systems, a process used in microfabrication to pattern parts on a thin film, which creates minuscule patterns down to nanometers. 

How to Buy ASML (NASDAQ: ASML) Stock

If you already have an account with a broker, buying shares for ASML is as simple as searching for the stock and buying the number of shares you want. Your broker will complete the final steps on its end. Alternatively, if you do not have an account, follow the steps below. 

Step 1: Pick a brokerage.

A broker acts as the go-between for you and the stock exchange (for ASML, it’s the Nasdaq exchange). You place an order via the broker to buy a stock, and the broker carries out those instructions. If you decide to purchase shares of ASML, you instruct your broker to buy the number of shares you request at the price you select, and it carries out those instructions. 

In return, the broker charges you a fee for its services. The fee varies depending on the broker. Therefore, it is vital to research costs and other aspects before setting up an account.

Step 2: Decide how many shares you want.

Once you have chosen a broker, fund your account and decide how many shares to buy. Take into account the amount of risk you want to take and the percentage of your account attributed to ASML. 

Starting with a small investment and adding to the position over time is a strategy used by many. However, before you make your purchase, consider your trade execution process. 

Step 3: Choose your order type.

This stage requires you to decide on how your position is executed. Different order types exist, but the primary two are market and limit orders. 

Market orders mean you purchase the shares at a price decided by the market. Or, in other words, you buy at the current market price. Therefore, using market orders results in a high chance your order will be filled. 

Limit orders mean that you decide the price you buy the stock at. You can determine what price you buy the shares at, but you face the risk that the order won’t be filled if the price doesn’t hit your predetermined level. 

Step 4: Execute your trade. 

After you have completed all the necessary steps to put you in a position to buy the shares, the last thing to do is click buy or submit. Once completed, you can monitor the stock and your other positions by navigating to the correct tab on your brokerage platform.

Where to Buy ASML

The task of finding the right broker can be long and arduous. Researching whether it is regulated, the different fees it charges and the stocks it offers can take hours. Check out this list of the best brokers for ASML shares to save time.

ASML Stock History & Value

ASML is critical to the production of microchips. The company’s history demonstrates its rapid growth, which has seen it become the market leader. With innovation leading the way and growth in the Asian market, its lithography systems were the key to its greater success.

ASML finally became a fully independent public company in 1995, listed on the Amsterdam and New York stock exchanges. The IPO helped fuel the growth and expansion of its R&D and production unit.

The growth of ASML since 2020 has been nothing short of impressive, reaching highs of $895.93 on Sept. 14, 2021. Since its opening price of 2021, ASML has increased 53.75%. The development of its latest technology, EUV machines, has played a vital role in expanding ASML.

Being the only company in the world capable of creating these machines has seen ASML somewhat monopolize the market with no sign of competition catching up. However, it is critical to the semiconductor business. 

The company expects the next decade to be huge, with annual revenue to reach $24 to $30 billion by 2025 and significant growth opportunities beyond 2025.

ASML: What Analysts Are Saying

ASML’s improvement can be pinned to its unique selling point and its dominant position over competitors. But how do analysts view the stock?

UBS Bear Case

UBS analyst David Mulholland lowered ASML’s price target and kept a neutral rating on the shares a month ago, shortly after the company reported strong earnings.

Meanwhile, in October, AlphaValue/Baader downgraded the stock to Reduce from Add following its Q3 earnings report. In September, New Street analyst Pierre Ferragu downgraded ASML to Neutral from Buy.

Ian Hogarth/Nathan Benaich Bull Case

Two technology investors, Ian Hogarth and Nathan Benaich, predict ASML stock to reach a valuation of $500 billion by the end of 2022.

According to the angel investors, ASML is the clear candidate as an alpha in the semiconductor market, becoming more and more critical in reaction to the global supply chains.

Pros and Cons of ASML

Pros

  • Unique position: ASML holds a strong position in the market and has a clear lead over its competitors. In addition, its EUV machines make it critical to a market that is currently in high demand to meet the current shortages and improve its supplier power.
  • Market: The company is crucial to large firms now more than ever. The Dutch company ships its services to the largest chip foundries worldwide, such as TSMC and Samsung, as it creates the smallest technology chips that are in desperate demand.
  • Future growth: ASML has increased projections for its future development after soaring demand has seen revenue and growth opportunities expand.

Cons

  • Outsourcing: ASML tends to outsource the majority of its services and therefore, if its suppliers do not meet deadlines, it can cause a knock-on effect. An example would be Carl Zeiss supplying mirrors. If not delivered, ASML cannot complete its products.
  • Chip shortages: The scarcity of the market has fueled demand for ASML stock, but if demand begins to cool, the reduction in orders may not justify such a high share price for ASML.

Is ASML a Buy, Sell or Hold?

It's difficult to argue against a market leader that has completely differentiated itself from the competition. The operation of its EUV machines allows the company to handpick only the largest chipmaking firms to sell to, such as Intel and Samsung. ASML stated it sees increased demands for its products and services due to the growth of semiconductor markets and increasing lithography intensity. Furthermore, semiconductor analysts believe it will take billions of dollars and around a decade for a company to compete with ASML. These are the precise reasons why a Buy rating for ASML has been the preferred choice among many investors.

Frequently Asked Questions

Q

Who are ASML competitors?

A

ASML competitors include Canon, KLA, Lam Research, Nikon and Applied Materials. ASML is the leading manufacturer in its industry.

Q

Does ASML sell to China?

A

The semiconductor equipment maker sells its products to China. It has recently stated it sees strong demand for its products in China.