Last week saw some volatility in the chipmaker stocks. With earnings season underway, some swings are always likely. There’s been some jockeying in recent years as companies have worked to retool for the AI boom.
Shifting market share can lead to big moves in a stock. But some chipmaker suppliers are also in a strong position to benefit no matter which chipmaker comes out with the latest model. These companies benefit from the overall increase in chip sales.
That’s great for chipmaking manufacturing firms like ASML (ASML). However, last week the company’s earnings leaked early. Trends in guidance suggested a slowdown in chip sales.
That caused a big drop for shares, even ahead of strong earnings from other chipmakers later in the week.
ASML shares now trade flat year-to-date, unwinding some significant gains. It’s likely that a slowdown won’t be fully felt until late 2025. That suggests that the stock may have gotten oversold.
Action to take: Contrarian investors may like shares here, as ASML still trades more than 10% below its pre-leak price. A rebound to recover in the weeks ahead looks likely. Shares also pay a 1% dividend at current prices.
For traders, the December 20 $750 calls, last trading for about $27.70, could leverage a bounce higher with less up-front capital than buying shares outright. The trade can likely see mid-double-digit returns on a trend higher over the next two months.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.