Shares in semiconductor stock ASML Holding (ASML) were lower today after a warning that investors may start to lose patience with it and other tech stocks if AI business improvements are not seen soon.
Investors Becoming Choosier on AI
According to a report on Reuters, investors could lose heart in the “AI market boom” if European companies spending huge amounts of money in areas such as generative artificial intelligence do not start seeing returns by next year.
The report stated that some investors were also becoming more “choosy” about AI as new low-cost models such as DeepSeek emerge and fears of recession put the squeeze on corporate IT spending. These investors are preferring to favor companies adopting AI technology such as software firm SAP (SAP) rather than those supplying chips and other hardware to the industry.
“Everyone was very narrowly invested in the AI enablers,” said Gerry Fowler, head of European equity strategy at UBS. “With DeepSeek, because it cheapens AI so much, it means to some extent the markets are now looking at who are the outright beneficiaries of AI.”
AI Spend Needs to Show Returns
However, those adopters also need to start showing returns quickly, or investors will lose faith in them as well. “The market will lose patience with unfettered investment in AI unless it starts to see some return on investment out of the end of it,” said Steve Wreford, lead portfolio manager on the global thematic equity team at Lazard Asset Management.
ASML is at risk as it supplies the necessary tools and materials used for the manufacturing of semiconductors and designs the machines that build microchips. Its three largest customers are thought to be TSMC (TSM), Intel (INTC) and Samsung Electronics. ASML stock is down 24% over the last 12 months.
Although the report was focused on European stocks and investors there is also a large read across from its findings for U.S AI-focused tech stocks such as Nvidia (NVDA), Advanced Micro Devices (AMD) and Microsoft (MSFT).
Is ASML a Good Stock to Buy Now?
On TipRanks, ASML has a Moderate Buy consensus based on 5 Buy and 2 Hold ratings. Its highest price target is $1,100. ASML stock’s consensus price target is $929.12 implying an 27.85% upside.
