ASML Holding (ASML), the pioneer in semiconductor equipment, has taken a significant stride into the artificial intelligence (AI) landscape by forging a long-term partnership with France-based Mistral AI. The alliance is designed to weave AI models into ASML’s entire product portfolio, encompassing research, development, and operational processes.
To cement the alliance, ASML is leading Mistral’s Series C funding round with an investment of €1.3 billion ($1.5 billion), securing roughly an 11% stake on a fully diluted basis. The move positions ASML as a strategic investor and key influencer in shaping Mistral AI’s technology roadmap, granting it a seat on the startup’s Strategic Committee.
Mistral AI, regarded as one of Europe’s most competitive tech startups and a regional peer to OpenAI, is at the forefront of developing large language models that underpin AI applications such as chatbots. Investments of this magnitude are essential for AI firms, which demand extensive infrastructure for model development and deployment.
The partnership is expected to elevate Mistral AI’s market position while delivering long-term advantages to ASML. Following the announcement on Sept. 9, ASML stock nudged higher by 1.12%, contributing to a 7% rally over the previous five trading days.
Headquartered in Veldhoven, the Netherlands, ASML develops and delivers semiconductor lithography systems. Its offerings span extreme ultraviolet lithography and deep ultraviolet immersion and dry solutions, alongside metrology and inspection equipment, computational lithography tools, system software, upgrades, refurbishment, and comprehensive customer support.
ASML provides hardware, software, and services to chipmakers across the globe, which is reflected in its market capitalization of roughly $312 billion. Over the past 52 weeks, shares have climbed 0.50%, while the stock’s year-to-date (YTD) performance has accelerated to 16%. Momentum remains robust, with ASML stock appreciating 11% in the past month.
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ASML stock currently trades at 28.6 times forward adjusted earnings, a premium over industry peers yet below its own five-year average multiple, signaling confidence and valuation discipline in the market.
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The company has maintained a streak of growing dividends for years, currently paying $7.16 annually, yielding 0.89%. Its most recent quarterly dividend was distributed on Aug. 6 to shareholders of record on July 29.
On July 16, ASML Holding released its fiscal 2025 second-quarter earnings, wherein total net sales rose 23.2% year-over-year (YOY) to €7.7 billion ($9.03 billion), aligning with the top end of management’s guidance and exceeding analysts’ forecasts of €7.52 billion ($8.82 billion).
Gross margin reached 53.7%, above guidance, driven by a stronger upgrade business and favorable one-off items that lowered operational costs. Net profit advanced 45% to €2.3 billion ($2.7 billion), representing healthy year-over-year (YOY) growth, while EPS came in at €5.90, reflecting a 47% increase from the previous year’s quarter.
Despite these encouraging results, the outlook casts a more cautious shadow. Management expects third-quarter net sales to range between €7.4 billion ($8.7 billion) and €7.9 billion ($9.3 billion), with gross margins narrowing to 50% to 52%.
For the full fiscal year 2025, ASML anticipates net sales growth of roughly 15%, revising its earlier guidance of €30 billion ($35.2 billion) to €35 billion (41.1 billion), while projecting a gross margin of around 52%.
The company projects further uncertainty heading into 2026, influenced by macroeconomic conditions and geopolitical developments, leaving growth prospects undefined at this stage.
Analysts, however, maintain optimism for near-term performance, expecting third-quarter EPS to climb approximately 9% YOY to $6.32. For fiscal 2025, consensus estimates project a 35.3% increase in the bottom line to $28.17, with fiscal 2026 EPS potentially advancing modestly to $28.37.
Citigroup recently revised its price target for ASML stock, lowering it from €860 ($1,008) to €825 ($967.50), yet the firm continues to maintain a “Buy” rating on the stock. The adjustment reflects ongoing evaluations of the company’s market position and forward-looking potential.
Overall, ASML stock carries a “Moderate Buy” consensus rating. Among 24 analysts covering ASML, 16 recommend a “Strong Buy,” one suggests “Moderate Buy,” and seven analysts rate it a “Hold.”
ASML stock’s average price target of $880.75 represents potential upside of 9.5%. Meanwhile, the Street-high target of $1,000 reflects a 24% potential gain from current levels.
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On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
