Why are investors scrutinizing ASML's capacity to meet record orders?

Investors are scrutinizing ASML's capacity because it has a backlog of 38.8 billion euros in record orders, and concerns exist about its ability to fulfill this unprecedented demand.

What is ASML's role in the AI chip industry?

ASML is the sole producer of essential EUV lithography systems, which are crucial for manufacturing the tiny circuitry of advanced AI chips for companies like TSMC and Nvidia.

How has ASML's stock performed recently?

ASML's stock has rallied significantly, making it Europe's most valuable company, with shares up 34% this month, though recent trading showed some volatility due to capacity concerns.

Home / Business and Economy / ASML's Rally Tests Limits Amid Record Orders

ASML's Rally Tests Limits Amid Record Orders

29 Jan

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Summary

ASML shares rallied significantly, making it Europe's most valuable company.
Record orders place immense pressure on ASML's production capacity.
Investor appetite is being tested by ASML's high valuation and stretched expectations.

ASML's Rally Tests Limits Amid Record Orders

ASML's stock experienced a significant rally, elevating it to become Europe's most valuable company. However, recent trading showed a sharp reversal as concerns surfaced regarding its capacity to meet a backlog of 38.8 billion euros in record orders. The Dutch firm, the sole producer of essential EUV lithography systems for advanced chip manufacturing, is vital for companies like TSMC, Nvidia, Samsung, and SK Hynix.

Despite the stock's impressive 34% rise this month and a valuation at 42 times 2026 earnings estimates, questions about meeting future demand persist. ASML's CEO has assured that the company will not become a bottleneck for the sector. Analysts remain divided, with some recommending the stock for its long-term AI-driven growth prospects, while others caution about the steep multiples.