Could ASML Be Next Following Nvidia's Stock Split?

Analysts Notebook wrote a column · Jun 17, 2024 19:29

After a period with few stock splits, major companies are now showing renewed interest in them. $NVIDIA (NVDA.US)$, for instance, has announced a 10-for-1 stock split effective June 7, making it the fifth of the "Magnificent Seven" stocks to split its shares in under four years. $ASML Holding (ASML.US)$, often described as "the most important tech company you've never heard of," is gaining recognition for its crucial role in semiconductor production. This growing awareness has driven its stock price to around $1,000 per share, making it one of the most expensive on U.S. exchanges. Consequently, investors are speculating whether ASML will approve a stock split this year.

Read Here: Nvidia's Upcoming Stock Split: What Investors Need to Know

Will ASML Be the Next to Do a Stock Split?

With its stock price near $1,000, ASML appears to be a strong candidate for a stock split.

The company has seen significant price appreciation, up over 400% in the past five years and more than 1,000% over the past decade. ASML's recent price of $1027.90 is higher than Nvidia's was when it announced its 10-for-1 split. ASML, which makes equipment for chipmakers like $Taiwan Semiconductor (TSM.US)$, has had three stock splits in its history but none since 2000. Although ASML has not indicated plans for a split, it seems likely if the stock price continues to rise.

Could ASML Be Next Following Nvidia's Stock Split?

Why is ASML's Performance So Impressive?

Since 2007, ASML has become a leader in producing extreme ultraviolet lithography (EUV) machines, giving it a significant competitive edge. Competitors like $Lam Research (LRCX.US)$ and $Applied Materials (AMAT.US)$ can only compete in less advanced semiconductor sectors. Companies such as Taiwan Semiconductor and Samsung rely on ASML's EUV machines to manufacture advanced semiconductors, crucial for technologies like AI. This makes ASML indispensable in the semiconductor supply chain.

Additionally, TSMC received tens of billions in subsidies to produce these chips outside of Taiwan, which accounts for about two-thirds of the world's third-party production capacity. Consequently, ASML is likely to play a crucial role in this transition.

ASML's technical advantage positions it as a strong investment, regardless of whether it undergoes a stock split. Although stock splits don't change the intrinsic value of shares or the size of ownership, they can generate increased investor interest. ASML has a history of stock splits and has experienced significant growth since its last reverse split 17 years ago, with its stock price rising over 28-fold to its highest nominal levels ever.

A lower nominal share price from a stock split could attract smaller investors who might otherwise avoid purchasing fractional shares due to potential fees. Additionally, a stock split often serves as a bullish signal, suggesting that the company expects its stock price to continue rising. With the increasing demand for AI chips and the expansion of fabrication plants worldwide, ASML shares are likely to remain on a growth trajectory for years to come. This suggests that a near-term stock split might not be the last. Its leadership in the semiconductor equipment market and the growing demand for its cutting-edge technologies indicate a strong, ongoing bull market for ASML stock. While the nominal share price itself doesn't impact this trend, the psychological boost from a split and the potential increase in interest from small investors provide additional reasons for ASML to contemplate such a move.

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Source: BarChart, Yahoo Finance, The Motley Fool, Nasdaq

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10baggerbamm : at some point the allure for the splits and the enormous push when announced and follow through after earnings is going to lose it lustre. you have to understand that aslm lithography guided down last quarter they're strong quarter is going to be the fourth quarter of this year. you cannot compare a company that guides down versus Nvidia which exceeded whisper for earnings exceeded whisper for revenue and it guided higher than they prior public announcement the quarter earlier. and broadcom was exactly the same thing they knocked cover off the ball also so to make a post that says is aslm the next one to split 10 for one yeah they could but they need to get their house in order first they need to put together the quarter that makes Wall Street analysts bow down and say we're not worthy. and this didn't happen in the first quarter and according to their conference call is not going to happen in the second or third quarter of this year it will be mid 3rd to 4th before they accelerate.

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Ehsan230 10baggerbamm : $Bitcoin (BTC.CC)$ 1

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T-Pass : not sure the split is as valuable as it used to be now that fractional shares are so popular, seems almost gimmicky now

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Money Thrill 10baggerbamm : Not agree with this vision. The quarter results are not good because of the restrictions from VS. Everybody here knows that. First of all the "orderbook" is double now. Second surface of compagny shall double. Just agree from gouvernement for 50 hectares with support for infrastructure for 2 billion euro and 20.000 New houses for highly educated engineers. And the best must yet Come with support of IMEC Belgium university, a totally New Quantum chip within 1 year I suppose. An new laboratory is now being built ... so the stock price shall double within 1 or 2 years if Everybody sees it

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Money Thrill Money Thrill : We are going to 3 to 4 billion connections per square cm ... needed for pattern recognition artificial intelligence

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104958359AdOEL : yez

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Money Thrill 103784820 : Yes, I live about 200 km from the company, Netherlands, Eindhoven and know it very well. You can be sure that the turnover will double Photo laboratorium research team

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Money Thrill : And for a better understanding... they do not sell chips, CPU or GPU’s. They sell the MACHINES ! 300 MILLION DOLLARS and they do not tell you who buyed the machines. This is secret. Who buys the machines shall be in the future the Leader in this sector.

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