The market is a greedy machine with many objectives, one of which is to transfer money from impatient and short-sighted investors into the hands of the savvy and patient. In today's uncertainty and volatility, born out of President Trump's recent trade tariff rollouts, there are new opportunities for savvy and patient investors to lock in great deals.
ASML is undervalued due to temporary market uncertainties, trading below its historical PE multiple, with strong future growth prospects driven by AI and robust competitive advantages. Q1 2025 results show higher year-over-year net sales and net income, indicating a strong business performance despite typical first-quarter weaknesses. ASML's competitive edge remains intact with high barriers to entry, superior technology, and increasing service revenue from durable machines.
ASML remains well-supported at its 10-year P/E floor of 22x and 2023 floor of $580s ranges, despite the recent macro headwinds and the intensified trade war. The robust demand for AI inferencing highlights its strong long-term fundamentals, thanks to its monopolistic position and 20Y head start in the lithography market. This is despite TSM's recent delay in deploying the High-NA EUV lithography tool for its A14 process through 2028, the mixed forward estimates, and the cyclical lithography capex challenges.
ASML dominates the EUV lithography market, crucial for advanced chip manufacturing. High-NA EUV systems, essential for 1.5nm and sub-1nm chips, promise reduced costs and higher efficiency, with Intel leading in prototype production. ASML's revenue is projected to reach EUR 44-66 billion by 2030, capturing 4-6% of the semiconductor market, with a gross margin target of 58%.
ASML beat expectations on revenue and margins, helped by stronger EUV ASPs and stable Installed Base Management sales. High NA tools are gaining traction, with early customer results showing faster adoption and significant process simplification. Bookings remain soft, with no new EUV orders from TSMC, raising questions around 2026 demand, despite unchanged 2025 guidance.
ASML reported better-than-expected Q1 earnings, with $8.82B in revenue and a 54% gross margin. The firm benefits from surging AI demand, selling 77 lithography systems and maintaining strong margins, supporting my strong buy rating. A strong revenue outlook and continual strength in AI spending should support ASML's gross margin and free cash flow prospects.
The consensus price target hints at a 35.3% upside potential for ASML (ASML). While empirical research shows that this sought-after metric is hardly effective, an upward trend in earnings estimate revisions could mean that the stock will witness an upside in the near term.
ASML Holding's Q1 results were relatively weak. The rising macro risks might affect its sales and costs in the following quarters. ASML remains a Sell for us right now.
We think ASML Holding is a 'Compounder' due to its strong revenue growth, profit growth, and decreasing share count. We think these are prerequisites for long-term outperformance. Despite recent volatility, ASML's current valuation presents a buying opportunity, with shares trading at the lower end of their historical valuation ranges. ASML's robust backlog and the increasing demand for AI-driven chip making capacity support its long-term growth potential.
Pinpointing strong bargains in the stock market is key to success, and the market is full of them right now. While some may be concerned about tariff effects in the short term, most of these stocks have incredibly bright long-term outlooks.
The crux of safe investment lies in choosing a company that is not burdened with debt. You can buy BILI, KINS, ENGIY, ASML and RMD.
ASML NASDAQ: ASML may not get as much attention as the famous Magnificent Seven stocks, but it is still one of the world's most important companies. This semiconductor stock makes extreme ultraviolet (EUV) lithography machines.