Stock-Split Watch: Is ASML Next?

In recent years, stock splits have become a significant trend in the market. Nearly every one of the "Magnificent Seven" stocks has executed a stock split, alongside other notable companies such as Shopify and Walmart.

Investors frequently speculate on which stock might be the next to split its shares. It is important to note that a stock split does not enhance a company's value or alter its fundamentals. Instead, it simply divides the existing shares into more pieces, ensuring that individual shareholders retain the same ownership percentage as before the split. Research from Bank of America suggests that stocks tend to perform better after a split, though the reasons for this phenomenon are not clear.

One potential candidate for a stock split is ASML Holdings (ASML -0.65%). The Dutch company, which specializes in semiconductor manufacturing equipment, currently has a share price exceeding $700, positioning it as one of the most expensive stocks in the market.

So, is ASML likely to split its stock? Historically, the company has undergone five stock splits, but none have occurred in the past decade; notably, two of those splits were reverse splits related to a special dividend and a synthetic buyback.

While ASML’s management has not indicated plans for a stock split, this is common—companies typically refrain from discussing such decisions until they are finalized. Let us examine the arguments for and against a split at ASML.

Reasons ASML Could Split Its Stock

With a share price over $700, ASML appears to be a strong candidate for a stock split.

A stock split would decrease the share price, making it more attractive to retail investors and employees looking to purchase shares. Additionally, splitting the stock signifies a milestone in the company's growth, effectively resetting the share price for further appreciation. Investors might expect ASML to follow suit after many of its peers in the semiconductor sector, such as Nvidia, Super Micro Computer, and Broadcom, have executed splits.

Moreover, a stock split signals management's confidence in the company, suggesting they anticipate continued growth in the stock price.

Reasons a Split is Unlikely

One major reason ASML may postpone a stock split is the recent performance of its shares. Despite the S&P 500 registering substantial gains this year, ASML's stock has declined, down 33% from its summer peak. This downturn is partly attributable to cuts in its 2025 guidance and disappointing third-quarter bookings, indicating weaker-than-expected demand in the semiconductor equipment market. Factors such as declining demand from China, which contributed nearly half of ASML's revenue this year, are projected to normalize to about 20% next year.

ASML has only recently returned to year-over-year revenue growth, reflecting the struggles it faces.

Given the stock's current vulnerability, a split seems improbable; management likely would have considered this option when the stock was performing well rather than waiting until its price decreases.

Will ASML Proceed with a Stock Split?

Investors eager for an ASML stock split may need to exhibit patience. As the company’s stock remains well below its summer high and faces operational challenges, a split does not seem warranted at this time.

However, conditions can change rapidly, especially if the stock price begins to recover. Should ASML shares surpass $1,000 again, discussions about a potential stock split may gain momentum once more.

Bank of America is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Bank of America, Broadcom, and Shopify. The Motley Fool has positions in and recommends ASML, Bank of America, Nvidia, Shopify, and Walmart. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

stocks, ASML, splits