ASML's Cutting-Edge Semiconductor Tech Powers AI, But High Valuation Gives Investors Pause
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ASML makes lithography machines that manufacture cutting-edge semiconductors needed for AI. It just developed a powerful new machine to stay ahead of competition.
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ASML's machines are very expensive, with the newest model costing over $270 million each, but provide major revenue.
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ASML's sales are lumpy quarter-to-quarter based on a few more or less machines sold, but expects 2025 to see strong growth after a 2024 transition period.
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ASML stock is up 15% year-to-date and trades at a very high 41x earnings multiple, indicating potential overvaluation.
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The author doesn't recommend buying ASML today due to high valuation, but sees it as a long-term winner in AI and will look to buy on any significant pullbacks.