ASML Stock Rises 58.2% in 6 Months: Should You Buy, Sell or Hold?

Core Insights - ASML Holding (ASML) shares have increased by 58.2% over the past six months, significantly outperforming the Zacks Computer and Technology sector's growth of 19% [1][6] - The stock is currently trading above its 50-day and 200-day simple moving averages (SMAs), indicating a bullish trend [4][6] Company Performance - ASML's growth is primarily driven by rising demand for AI-driven semiconductor manufacturing equipment, particularly for logic and memory chips [7][8] - The company holds a near-monopoly in extreme ultraviolet (EUV) technology, which is essential for producing advanced chips at 3nm and below, providing it with significant pricing power [8] - ASML is advancing into sub-2nm production with High Numerical Aperture (High-NA) EUV systems, which are expected to be crucial for future chip density and efficiency [9] Financial Projections - For Q4 2025, ASML expects revenues between €9.2 billion and €9.8 billion, representing a 26.3% sequential increase at the midpoint [10] - Full-year 2025 sales are projected to improve by around 15%, with margins nearing 52% [10] Challenges - ASML faces macroeconomic challenges, including trade tensions and geopolitical developments that may impact customer confidence and long-term capital expenditure decisions [11] - The company also encounters competitive pressures from other semiconductor equipment manufacturers like Applied Materials, Lam Research, and KLA Corporation [12][13][14] - ASML anticipates a normalization of its China business after two years of extraordinary growth, which may lead to a decline in revenues from this market [15] Valuation - ASML's stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 40.78X, compared to the sector average of 23.19X, indicating that it is overvalued [16] Investment Recommendation - Given ASML's strong position in EUV technology and the growing demand for AI-related chips, it is suggested to hold the stock for now, while being mindful of competitive and macroeconomic challenges [18]