ASML Holding Soars 45% YTD: Is the Stock Still Worth Buying?

Core Viewpoint - ASML Holding has demonstrated significant stock performance in 2025, with a year-to-date increase of 44.9%, outperforming the broader technology sector and several semiconductor peers [2][19]. Stock Performance - ASML shares have been volatile in 2025 but have outpaced the Zacks Computer and Technology sector's 23% gain [2]. - Compared to semiconductor peers, MKS Inc., Cirrus Logic, and FormFactor, which have seen YTD increases of 34.5%, 16.1%, and 11% respectively, ASML's performance stands out [2]. Competitive Advantage - ASML holds a near-monopoly in extreme ultraviolet (EUV) lithography, essential for manufacturing advanced chips at 3nm and below, providing it with extraordinary pricing power and strategic importance [5]. - The company is advancing its High Numerical Aperture (High-NA) EUV systems, which are crucial for sub-2nm production, indicating a significant long-term growth potential [6][8]. Financial Performance - In Q3 2025, ASML reported earnings of €5.48 per share, a 3.8% year-over-year increase, and revenues of €7.52 billion, up 0.7% [11]. - The gross margin improved to 51.6%, attributed to higher volumes of low-NA EUV tools and upgrades, despite a 6.3% decline in system sales [12]. - For Q4 2025, ASML expects revenues between €9.2 billion and €9.8 billion, with gross margins projected at 51-53% [13]. Valuation - ASML's forward 12-month price-to-earnings (P/E) ratio is 33.45X, higher than the sector average of 28.15X, reflecting its market position and technology leadership [14][18]. - The premium valuation is justified by ASML's monopoly in EUV lithography and consistent margin performance [14]. Growth Drivers - The demand for artificial intelligence (AI) is a significant growth driver for ASML, as AI workloads require advanced chips that depend on the precision lithography provided by ASML's EUV machines [9][10]. - The complexity and cost of EUV technology provide ASML with deep competitive protection, ensuring its continued dominance in the semiconductor sector [10]. Conclusion - ASML's leadership in EUV technology, progress in High-NA systems, and increasing demand for AI-related chips position the company for sustained financial performance, making it a strong candidate for long-term investment [19].