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Is This the Best Semiconductor Stock Right Now?

By Neil Rozenbaum – Jul 26, 2021 at 11:00AM

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ASML's unique position in the semiconductor market makes it a must-have in a long-term portfolio.

This video will talk about another semiconductor player, and probably the most important, ASML (ASML -1.99%). We're going to have a look at its recent earnings report and what it's doing. This is the fourth semiconductor I've covered this month. We went over the comeback Intel is making, how AMD climbed the semiconductor ladder, and why Nvidia will join the trillion-dollar club

What is ASML?

iPhones have chips that are designed by Apple and manufactured by TSMC, which uses ASML's systems. So what do these machines actually do? 

Think of them as printers, very expensive printers. Each chip has many layers, and the EUV machine "prints" these layers. It takes around three to four months to build such a machine and about 100 or 150 people to assemble it and teach how it works. 

Earnings highlights

ASML reported €4.0 billion net sales and €1.0 billion net income in Q2 2021, with net sales now expected to grow by around 35% in 2021. Q2 gross margin of 50.9% and net bookings of €8.3 billion are more than double net sales for the quarter. ASML also announced a new share buyback program of up to €9 billion to be executed by December 31, 2023.

Pros and cons

ASML's main competitor is its own previous systems. If the new system is not significantly better, what's the point of upgrading? 

ASML also outsources a lot. So if one of its suppliers is not up for the job or has delays, that has negative effects on ASML and then on the rest of the industry. For example, the lenses and mirrors that ASML uses are from Carl Zeiss, and if that company can't deliver, ASML can't complete its machines.

Do watch the video below for the full insights. 

*Stock prices used were the closing prices of July 23, 2021. The video was published on July 25, 2021.

Neil Rozenbaum owns shares of Intel. The Motley Fool owns shares of and recommends Advanced Micro Devices, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends ASML Holding and Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long March 2023 $120 calls on Apple, short January 2023 $57.50 puts on Intel, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policyNeil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

ASML Holding Stock Quote
ASML Holding
$591.84 (-1.99%) $-12.01
Apple Stock Quote
$148.11 (-1.96%) $-2.96
Taiwan Semiconductor Manufacturing Stock Quote
Taiwan Semiconductor Manufacturing
$81.40 (-0.69%) $0.57
Intel Stock Quote
$29.34 (-1.11%) $0.33
Nvidia Stock Quote
$162.70 (-1.51%) $-2.49
Advanced Micro Devices Stock Quote
Advanced Micro Devices
$75.14 (-1.65%) $-1.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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