Is ASML a Buy?

Core Viewpoint - ASML Holdings, despite its monopoly on critical AI technology and extreme ultraviolet lithography (EUV), is trading at a multiyear low valuation, underperforming compared to major indices and ETFs [1][2]. Group 1: Market Position and Valuation - ASML holds a monopoly on EUV technology essential for producing semiconductors below the 7nm node, with the industry advancing towards 2nm chips by the end of the year [2]. - The company's stock has underperformed over the past five years, leading to a current valuation of approximately 25 times earnings, the lowest in a decade, making it appear as a bargain by growth stock standards [4][3]. - Recent selloffs are attributed to concerns regarding the growth outlook for 2026, with management indicating uncertainty about guaranteed growth next year, a shift from previous expectations [6]. Group 2: Economic and Regulatory Concerns - Tariffs pose potential direct and indirect impacts on ASML's end markets, particularly as many products are assembled in East Asia, with uncertainties surrounding Section 232 tariffs on semiconductors [7]. - The broader economy may experience demand depression due to these tariffs, as evidenced by recent job creation figures falling below targets [8]. Group 3: Technological Innovations and Industry Trends - The shift in chipmaking technology from finFET to gate-all-around transistors and innovations like backside power are influencing ASML's valuation, as these advancements are not directly related to lithography [10][11][12]. - Other semiconductor equipment stocks in etch, deposition, and metrology have seen valuation increases, contrasting with ASML's declining valuation [13]. Group 4: Long-term Growth Prospects - Despite near-term uncertainties, ASML's long-term growth opportunity remains intact, with a competitive advantage in lithography expected to drive future demand [15]. - The company maintains its revenue outlook for 2030 between 44 billion to 60 billion euros, suggesting a strong long-term value proposition for investors [16]. - Projected net profits by 2030 are estimated to be between 14 billion and 23 billion euros, relative to its current market cap of 230 billion euros, indicating solid value for long-term investors [17].