Key Takeaways
- Shares of ASML’s U.S.-listed stock have declined 7% over the previous month, driven by investor rotation away from semiconductor names with AI exposure.
- Krish Sankar of TD Cowen maintains a Buy recommendation on ASML with a €1,500 price objective (approximately $1,735).
- The company’s valuation premium compared to industry peers has contracted from 120% down to roughly 20% since the end of 2022.
- Upcoming generations of logic processors and DRAM memory chips are anticipated to demand increased deployment of ASML’s EUV technology.
- Jensen Huang of Nvidia has projected $1 trillion in AI chip purchases extending through 2027, strengthening the outlook for ASML’s equipment demand.
ASML has experienced a retreat from its recent peak levels, prompting TD Cowen analyst Krish Sankar to identify the current moment as “very attractive” for investors. Sankar highlights a more reasonable valuation alongside robust long-term expansion potential driven by AI semiconductor requirements.
The U.S.-traded shares of ASML have fallen 7% during the past month. This decline occurred as market participants shifted away from chip stocks connected to artificial intelligence expansion, despite ASML posting record-breaking orders for its lithography equipment.
The company occupies a distinctive position within the semiconductor manufacturing ecosystem. ASML maintains essentially exclusive control over extreme ultraviolet (EUV) lithography technology, the critical machinery required to produce cutting-edge microchips. The company faces no direct competition in this domain.
Since the close of 2022, ASML’s valuation premium relative to semiconductor equipment rivals such as Applied Materials, Lam Research, and KLA Corp has narrowed from 120% down to approximately 20%. Sankar attributes this contraction to current chip production techniques that utilize fewer EUV processing steps from ASML’s systems.
Sankar maintains that this situation is poised to shift. Coming generations of both logic semiconductors and memory products—particularly DRAM modules—will require additional EUV layers during fabrication. The memory segment represents an opportunity that Sankar believes the market has “underappreciated.”
High-NA EUV: The Next Growth Driver
ASML’s most advanced machinery, the High-NA EUV platforms, remain in the initial stages of commercial deployment. The company recorded revenue from only two of these advanced units during Q4 2025, while shipping 94 standard lithography systems during that same quarter.
TSMC has adopted a measured stance regarding public commitments to High-NA EUV technology. The foundry giant has indicated it can extend the operational lifespan of current equipment. Sankar anticipates that enhanced reliability metrics of the newer systems will ultimately attract customers.
TD Cowen’s projections anticipate 60 lithography system shipments during 2026, expanding to 68 units in 2027 as High-NA deliveries double and legacy models transition to refreshed versions.
Sankar holds a Buy recommendation on ASML’s Amsterdam-traded shares with a €1,500 price objective, calculated at 48 times his earnings per share projection for 2027. The Amsterdam-listed stock stood at €1,165 on Thursday. The U.S.-listed shares decreased 1.4% to $1,347.40 during premarket trading hours.
AI Spending Fuels Long-Term Demand
The demand environment surrounding ASML remains robust. Nvidia CEO Jensen Huang, during his GTC 2026 presentation on March 16, elevated his AI chip order projection to at least $1 trillion spanning through 2027. Broadcom CEO Hock Tan has independently projected $100 billion in AI semiconductor revenue for fiscal 2027.
Amazon, Microsoft, Google, and Meta are projected to allocate nearly $600 billion combined in capital investments during 2026, with substantial portions directed toward AI infrastructure development.
ASML derives additional benefit from a stable recurring revenue model. Maintenance services for its installed equipment base generated roughly one-quarter of total 2025 revenue.
ASML currently commands a forward price-to-earnings ratio of 39.8, exceeding its 10-year median of 35.8. The company’s market capitalization stands at approximately $527 billion.
