ASML (ASML) shares rose by up to 5% in premarket trading after the company posted stronger-than-expected fourth-quarter earnings. The Dutch semiconductor equipment giant also addressed concerns that DeepSeek's recent AI breakthrough might negatively affect the demand for AI chips, with CEO Christophe Fouquet highlighting the long-term opportunities in the market.

ASML is the inventor of the technology essential for producing the most advanced AI chips and is the sole manufacturer of the intricate machines—costing nearly $400 million each—that use its EUV (Extreme Ultraviolet) lithography technology.

The company’s machines are sold to leading chipmakers like TSMC (TSM), which uses them to manufacture chips for companies like Nvidia (NVDA), Apple (AAPL), and others.

For the fourth quarter, ASML reported earnings per share of €6.85, surpassing the expected €6.68. Its revenue for the quarter hit €9.2 billion, also exceeding forecasts of €9 billion, as per Bloomberg’s consensus estimates.

ASML’s 2025 first-quarter sales forecast also exceeded expectations. The company’s guidance of €7.5 billion to €8.0 billion is higher than the €7.2 billion consensus estimate.

In a statement, CEO Fouquet said, "AI growth is the key driver for industry expansion," noting that the shift in market dynamics could present both risks and opportunities for ASML’s customers, as reflected in the company’s 2025 revenue range.

ASML’s results were under more scrutiny after its previous earnings missed expectations, which caused its stock, along with other chipmakers', to fall. Additionally, the stock has faced pressure in recent weeks due to tighter export controls from the Netherlands and the US aimed at limiting China's access to advanced semiconductor technologies.

Despite the growing tensions, ASML’s sales in China have been rising sharply, with revenue from the region reaching €9 billion in 2024, up from €6.4 billion the previous year, according to Bloomberg.

The stock dropped earlier this week as news of a cost-effective AI model from Chinese company DeepSeek raised questions about the high spending of Western tech companies on AI infrastructure, including semiconductors produced by ASML's machines. However, Fouquet dismissed these concerns, stating, “A lower cost of AI could lead to more applications, and more applications will drive higher chip demand over time.”