ASML lithography info web page
Stock completely wipes out DeepSeek losses after 9% rally / Image source: Adobe
  • Strong demand settles 2025 nerves
  • Stock completely wipes out DeepSeek losses 
  • Chinese hedge-fund backed start-up challenging AI parameters

The solid Q4 figures from ASML (ASML:AMS) will go a long way in helping stabilise chip industry sentiment after the boom in enthusiasm around AI was so savagely dented earlier in the week by the emergence of a low-cost LLM (large language model) from Chinese start-up DeepSeek.

The development raised questions around the necessity of massive AI infrastructure spending planned by most of the US tech industry, and others around the globe, and since ASML is one of the picks and shovels equipment suppliers to the chip industry, and therefore AI, better-than-expected Q4 will be a relief to investors.

ASML STOCK SOARS

That relief is made tangible by today’s near-9% share price rally, effectively wiping out the Dutch tech giant’s DeepSeek declines earlier in the week.

Given ASML’s longish sales cycle, it’s optimism for the rest of 2025 makes perfect sense, given that much of customers’ spending is likely already committed, but what then?

As Russ Mould, investment director at AJ Bell, points out, ‘it will take time to understand if the demand profile will change thanks to DeepSeek for 2026 and beyond.’

AI REMAINS CRUCIAL GROWTH DRIVER

ASML chief executive Christophe Fouquet is clear that AI is the key driver of growth for the industry so if developing generative AI becomes less complex and cheaper, it could be bad news for ASML and other names in the semiconductor industry given sluggish demand for chips for smartphones, tablets and personal computers.

That said, given that the LLMs needed to train AI systems still require vast data processing capability, the industry’s need for advanced chips with optimal facility made well still stand. Time will tell.

DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Steven Frazer) and the editor (Martin Gamble) own shares in AJ Bell.

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Issue Date: 29 Jan 2025