Investing.com -- Following ASML’s underperformance versus SAP (NYSE: SAP ) (ETR: SAPG ) in the first quarter, Jefferies sees more upside for ASML (NASDAQ: ASML ) (AS: ASML ) shares over one- and five-year horizons. However, the firm expects SAP to post strong Q1 results and, given its clearer catalyst path, views it as better positioned in the near term, while uncertainty around ASML is expected to persist.
During the first quarter, SAP’s share price saw a 3% increase, bolstered by a strong fourth-quarter performance and a solid cloud backlog. The company also issued conservative yet solid guidance for 2025.
In contrast, ASML experienced an 11% decline in its share price, with concerns about 2026 overshadowing its strong orders in the fourth quarter. This performance was set against the backdrop of the industry indices, with the IGV down 12% and the SOX down 20% over the same period.
“ASML reassured on 2025 with strong orders at Q4, but our concerns on 2026 remained a key uncertainty and visibility has not improved; if anything, it has deteriorated,” Jefferied analysts said in a note.
Looking ahead to the second quarter of 2025, Jefferies expects more upside for ASML shares compared to SAP on a one-year basis. SAP, however, is still seen as more attractive for another quarter, with anticipated organic revenue growth of 12% in Q1 and a strong backlog providing visibility.
The analysts also highlight the potential upside to SAP’s EBIT and free cash flow (FCF). Moreover, SAP’s upcoming investor event at Sapphire in May could further clarify the revenue implications from AI innovations.
“For ASML, we are worried about and expect continued focus on orders. Visibility to 2026 remains the key uncertainty for ASML shares, in our view, and we do not expect this to improve as we see downside risk for Q1 orders,” the analysts added.
On a longer-term scale, Jefferies values both SAP and ASML based on projections for 2030, with a significantly higher upside predicted for ASML.
In all but the downside scenarios, ASML is expected to outperform SAP, with a potential increase of 255% compared to SAP’s 101%. However, the investment bank cautions that ASML’s visibility is lower, which could lead to more volatility, while SAP is likely to be a steadier investment.
Overall, while SAP is positioned to perform well in the near term, Jefferies ultimately sees ASML as the better long-term investment, with the caveat that investors should prepare for a more volatile journey with the stock.