ASML is no longer the most valuable technology company in Europe. SAP has been threatening to surpass it for days and has ended up doing so. The short-term prospects for both explain the surprise: The chip business is going to grow less than expected and the software business is going through a good moment. However, this change in the technological throne could be temporary because The Dutch woman has very attractive potential, that will be recovered as it emerges from the slump in which it currently finds itself.
The German software firm is already the largest technology company on the Old Continent. SAP has been closing the gap of 100,000 million euros that separated it from ASML throughout this year. At the start of the year, that was the gap between the capitalization of one and the other, now non-existent. The Walldorf-based firm surpassed the Dutch company for the first time last week and this Tuesday it did so again.
Just today, SAP presented its third quarter results, which are proof of the good momentum the company’s business is going through and its solid short-term prospects. The company announced a restructuring at the beginning of the year that is paying off. The idea was reorganize to strengthen the Business AI area, which is now giving him joy.
What this department is in charge of is migrating the software used by companies from local data centers to the cloud. It seems that SAP is having a great capacity to convince and that its clients are taking that step. In part, thanks to the rise of artificial intelligence (AI), which requires processing more data and is an incentive to move to the cloud.
“SAP is dealing with the cost-cutting crisis better than its competitors, as it is being able to convince its customers to move the software they use every day to the cloud, something we believe will continue in the future.” next quarter,” they explain from Bloomberg Intelligence. “We continue to like the company and its growth in the cloud segment. The long-term prospects look promising,” says Jan Frederik Slijkerman, an analyst at ING.
Apart from reinforcing Business AI, the German company adjusted its workforce with an incentivized leave plan and job changes within the company, which affected around 8,000 people. Another measure that was part of the restructuring plan and that now seems correct, despite the fact that it involves expenses of about 3,000 million euros.
These changes have been collected with a rally of 51.1% in the stock market so far this year, according to its last closing. This Tuesday, after presenting results, the company has climbed a little more and has reached historical highs of 219.5 euros. Precisely today and on the occasion of their accounts, analysts such as Morgan Stanley, Citi or HSBC have revised their target price upwards. Despite everything, there have also been reductions from those who consider that SAP’s good moment is already reflected in its action, which has gone too far.
Logically, the fact that SAP is trading at record levels leaves a smaller margin for growth in the coming months. Beyond the latest movements of the analysts, the market consensus gives a potential of 0.4% to the firm, up to 220 euros, the price at which they see their titles within a year.
The ASML situation is just the opposite. While SAP’s orders have been growing, the chip firm’s have been declining. The Dutch company sells ultraviolet light machines, necessary for the manufacture of processors. Although it has also benefited from the rise of AI, as its equipment is needed to melt the most sophisticated chips, that has not been enough to offset the slowdown in other areas.
China and the 300 million machines
Demand for less cutting-edge semiconductors has cooled and that has an impact on ASML machinery that is not cutting-edge. The newest machines cost 300 million euros, while previous versions were around 150 million euros, which makes there more uncertainty with orders, explained the broker Xtb last week, following the presentation of results. The accounts were listed with a drop of 15.6% on the stock market.
Another front that ASML has on the table is China. The United States sanctions affect the Dutch company, which has a good part of its market in the Asian country. But it faces limits in selling its most cutting-edge technology there. The good news is that JP Morgan believes the company You can offset these sales with orders from other customers throughout 2025 and begin to reflect it in 2026.
The world’s largest chip foundry, Taiwan Semiconductor Manufacturing Company (TSMC) is building new factories outside Taiwan to minimize the risk of the trade war in the supply chain and this means more orders for ASML in neutral zones. TSMC is an important customer. Furthermore, the same analysts believe that The demand that affects less sophisticated chips will also recover. That is to say, what was the most valuable European technology company is in a slump, but it will begin to get out of it next year.
ASML has lost 3.5% of its stock market value so far this year, until its last close at 657.6 euros. It is very far from the 1,002 euros high it reached in July. Although its situation is currently weak, the consensus of analysts does see potential in the next 12 months. In fact, they consider that Its shares will appreciate by 28.3%. Although the capitalization of SAP is 269,840 million euros and that of ASML is 267,362 million euros, everything indicates that the surprise It will be temporary.
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