ASML Stock Trades at a Discount: Should You Buy, Sell or Hold?

Core Insights - ASML Holding N.V. is currently trading at a discounted valuation with a forward 12-month P/E ratio of 26.14, lower than the Zacks Computer and Technology sector average of 28.19 [1][3] - The stock has underperformed compared to major semiconductor companies like Broadcom, NVIDIA, and AMD, which have P/E multiples of 38.58, 36, and 24.47 respectively [3] - Despite strong Q2 results, ASML's stock dropped 9.6% due to weaker-than-expected third-quarter guidance and concerns about the 2026 growth outlook [4][5] Financial Performance - ASML reported Q2 net sales of €7.69 billion, a 23.2% year-over-year increase, and EPS of €5.90, up 47.1% [4] - Converted to USD, Q2 revenues and EPS were $8.7 billion and $6.70, respectively, both exceeding analysts' expectations [4] - The company issued disappointing guidance for Q3, expecting revenues between €7.4 billion and €7.9 billion, translating to $8.6 billion to $9.2 billion, below the Zacks Consensus Estimate of $9.81 billion [11] Growth Outlook - Management expressed uncertainty about the growth outlook for 2026, stating they "cannot confirm growth" due to customer hesitation and ongoing market uncertainty [9][10] - Ongoing U.S.-China tariff discussions are negatively impacting customer capital spending timelines, potentially delaying orders and revenue recognition [10] - The Zacks Consensus Estimate for 2026 earnings has been revised downward by 4.1% over the past 30 days [12] Market Performance - Year-to-date, ASML's stock has gained 7.1%, underperforming the tech sector's growth of 13.7% and major semiconductor players like Broadcom, NVIDIA, and AMD, which have risen 32.1%, 34.4%, and 47% respectively [6] - The stock's valuation discount is viewed as a reflection of real risks ahead rather than a buying opportunity [13]