ASML continues to outshine rivals despite US trade restrictions

ASML’s shares kicked off 2025 with a standout rally, rising over 7% since January trading began. In comparison, Nvidia – a leader in artificial intelligence – saw a modest gain of just 1.21% during the same period. Meanwhile, the iShares Semiconductor ETF (SOXX), which includes major US chipmakers such as Nvidia, Broadcom, and Advanced Micro Devices Inc, has been flat year-to-date, with most US semiconductor stocks recording negative performance.

European equities gain momentum

The European stock markets have started 2025 strongly, in stark contrast to negative returns in US equities. All major European benchmarks are up year-to-date, with Germany’s DAX leading the charge at 1.54%. Conversely, Wall Street’s momentum stalled in late December following the Federal Reserve’s hawkish rate cut. Trump’s pledge to increase tariffs on global imports has fuelled fears of renewed inflation in the US, leading to a sharp rise in government bond yields. This surge has spooked US markets, with the S&P 500 declining 0.93%, the Dow Jones Industrial Average falling 1.42%, and the Nasdaq Composite slipping 0.77% year to date.

While the broad-based rally in European markets may have contributed to ASML’s outperformance, the Dutch chip equipment maker’s near-monopoly status in the semiconductor industry remains a critical factor. ASML produces extreme ultraviolet lithography systems (EUVs), the world’s most advanced machines for manufacturing cutting-edge chips. With the ongoing demand for AI chips, analysts have positioned ASML as one of the top picks in the semiconductor sector.

Analysts project ASML’s earnings per share to increase by 26% in 2025, following an estimated decline of 4% in 2024. The company maintains a positive long-term outlook, expecting robust demand for its EUVs over the next five years. ASML forecasts revenues between €44bn and €60bn, with gross margins ranging from 56% to 60% by 2030.

Trade tensions and risks

The outgoing Biden administration is preparing one final round of export restrictions on artificial intelligence (AI) chips targeting China, according to a letter by the US government.

“It is our understanding that the Bureau of Industry and Security (BIS) is close to publishing a new ‘Export Control Framework for AI Diffusion’ that would create a global licensing regime for the export of advanced GPUs and the model weights of closed-weight dualuse AI models”, stated in the document released on 2 January.

The new rule is likely to list the number and models of AI chips that can be exported to China, potentially impacting ASML’s sales to its largest market. 

The company has cancelled shipments of chip-making machines to China that had been already scheduled previously.

“A license for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 has recently been partially revoked by the Dutch government, impacting a small number of customers in China”, the company stated in a press release on 1 January, going on to state: “In recent discussions with the US government, ASML has obtained further clarification of the scope and impact of the US export control regulations.”

In December, the US imposed additional China export restrictions, with ASML being exempted from these measures. The Dutch firm maintained its outlook for 2025, despite a reduction in the outlook of China’s contribution to its business to around 20%, down from nearly half.

“We do not expect any direct material impact on our business”, ASML said in response to the new US rules, maintaining its overall outlook for 2025.