ASML shares jump as surge in orders defies fears of DeepSeek hitting AI chip demand

Dutch semiconductor colossus ASML on Wednesday reported a big jump in fourth-quarter net bookings, suggesting strong demand for its advanced chipmaking tools despite as DeepSeek’s low-cost model raises concerns over AI spending.

ASML shares surged as much as 11% during morning allots, but later pared gains later in the day to close 5.6% higher.

Here’s how ASML did versus LSEG consensus guesses for the fourth quarter:

• Net sales: 9.26 billion euros ($9.64 billion) versus 9.07 billion euros look forward.
• Net profit: 2.69 billion euros versus 2.64 billion euros expected.

ASML said that net bookings, a key incriminate in of order demand, came in at 7.09 billion euros. That was up 169% from the 2.63 billion euros ASML reported in the third place, and exceeded the 3.99 billion euros expected by analysts polled by Visible Alpha, according to Reuters.

The semiconductor equipage maker also said that its 2025 full-year sales outlook remains unchanged from its previous conduct of between 30 billion and 35 billion euros of total revenue.

ASML had an order backlog of approximately 36 billion euros at the end of 2024, CFO Roger Dassen express in a transcript of a video interview.

ASML suffered losses during a global tech sell-off earlier in the week after the rollout of Chinese startup DeepSeek’s R1 explanation model, which claims to undercut OpenAI on both cost and performance.

The move triggered questions over eyewatering expending from the likes of leading AI players OpenAI and Microsoft on Nvidia graphics processing units, which are needed to indoctrinate and run the most advanced AI models.

This could hit demand for ASML’s high-precision extreme ultraviolet (EUV) machines, which are habituated to to print the most advanced microchips. EUV tools accounted for 3 billion euros of ASML’s fourth-quarter net bookings.

ASML CEO Christophe Fouquet canceled a positive note on the arrival of low-cost AI models such as DeepSeek, telling CNBC’s Arjun Kharpal that he awaits this development to drive more demand for semiconductors — not less.

While he declined to comment on specifics with DeepSeek’s R1, Fouquet bruit about that he sees no sign of a slowdown in demand for AI-focused chips.

“A lower cost of AI could mean more practices. More applications means more demand over time. We see that as an opportunity for more chips demand,” Fouquet believed in an interview Wednesday.

There is “a lot of discussion” in the industry surrounding DeepSeek, but Fouquet said ASML hasn’t heard from characters asking about the impact of the Chinese firm’s model on chip demand.

Ben Barringer, technology analyst at Quilter Cheviot, said that the earnings publicize offered “reassurance to the market following the turmoil due to concerns around DeepSeek.”

Michael Field, chief equity strategist at Morningstar, foresaw CNBC’s “Squawk Box Europe” that ASML’s fourth-quarter results vindicate the view that the chip firm isn’t “overvalued” or “thoroughly of puff.” ASML is Morningstar’s top AI pick in Europe, he added.

“Genuinely, we think the numbers support the [investment] case and, really, we think the shares are worth more like 850 (euros) — which, given the pullback you’ve seen in the final few weeks, offers a pretty good opportunity for investors,” Field said Wednesday.

ASML shares closed at 646.60 euros per appropriation Tuesday.

Fouquet added that ASML’s expecting a rebalancing of demand in China in 2025. Beyond the past two years, ASML saw heightened demand for its chipmaking tools in the country as Chinese firms stocked up to get ahead of U.S. restrictions on exports of moved semiconductor machines.

“We had a huge backlog in China, at the end of 2022, because 2022 was a year we couldn’t feed the market with all the devices the market needed. This has kind of been absorbed last year,” Fouquet told CNBC.

He added that ASML watches to return to a more “normal” demand ratio in China, compared with other markets this year.

“We foresee the ratio of our business in China to be lower than what it has been for sure in 23, 24,” Fouquet added.