Where Will ASML Stock Be in 5 Years?

Core Viewpoint - The demand for AI chips is expected to positively impact ASML's future, despite its cyclical nature and recent struggles in performance [1][3]. Company Overview - ASML is a leading semiconductor equipment maker, essential for the production of advanced chips, particularly through its extreme ultraviolet lithography (EUV) technology [5][6]. - The company’s highest-end EUV machines are priced over $400 million, and clients spend billions annually on maintenance, indicating a strong dependency on ASML's products [7]. Market Dynamics - The AI chip market is projected to grow at a compound annual growth rate (CAGR) of 29% through 2030, which is expected to drive ASML's sales significantly [7]. - Major competitors in the advanced chip manufacturing space include TSMC, Samsung, and Intel, limiting ASML's client base for its most advanced equipment [8]. Financial Performance - In the first half of 2025, ASML reported revenue of €15.4 billion ($18.0 billion), a 34% increase from the same period in 2024, with a gross margin of 53.7% [10]. - The company maintained controlled growth in costs and expenses, resulting in a net income of over €4.6 billion ($5.4 billion) for the first two quarters [11]. - Despite positive first-half results, ASML's outlook for the second half of the year has become less optimistic, expecting a 15% annual net sales growth for 2025 and a decrease in gross margins to 52% [11]. Valuation and Future Outlook - ASML's current P/E ratio of 28 is at a multiyear low, suggesting potential for multiple expansion as the market for AI-ready semiconductors grows [12]. - Over the next five years, ASML is expected to outperform the market, driven by the increasing demand for AI chips and its critical role in the semiconductor supply chain [13][14].