What’s New With ASML Stock?

ASML (NASDAQ:ASML), the Dutch semiconductor equipment giant seen as one of the most crucial companies in the semiconductor ecosystem, has seen its stock climb nearly 25% over the past month, recovering from a dip in July after its Q2 earnings release, which raised concerns about 2026 demand. What makes ASML critical is its unique role: it builds the machines that allow the world’s most advanced chips to be manufactured, making it indispensable to the entire semiconductor value chain. So with momentum back in the stock, is it time to buy?

Image by Joachim Schnürle from Pixabay

A One-Of-A-Kind Company

First, here’s some context on what ASML does. ASML builds the most sophisticated manufacturing tools in the semiconductor industry, and arguably the world. Its crown jewel remains its extreme ultraviolet (EUV) lithography machines. These systems use ultra-short wavelengths of light to etch fine circuit patterns onto silicon wafers, enabling the leading end chips of 5 nanometers and below. In simple terms, without ASML, the processors that drive AI data centers, smartphones, and even modern cars simply wouldn’t exist. That makes ASML a one-of-a-kind company. EUV is an important technology for extending Moore’s Law, the long-standing industry trend of doubling transistor density approximately every two years, allowing chipmakers to continue pushing the limits of computing power and cost-effectiveness. See AVGO Stock vs. NVDA & INTC

What’s Driving The Recovery?

Several factors have turned sentiment more positive for ASML in recent months. Firstly, U.S. tariffs on semiconductor equipment, including ASML’s lithography tools, were avoided due to a U.S.-EU trade deal that exempts semiconductor production equipment from tariffs. This removed a major overhang for ASML stock.

On the demand front, AI spending is still running hot. Giants like Nvidia and Broadcom are posting massive growth as the surge in training and running complex models fuels demand for high-performance semiconductors – the very kind ASML’s machines make possible. In fact, the company says several of its biggest customers are already ramping up EUV capacity to keep pace with the growing appetite for AI chips. To get a sense of the scale of the investments, Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and Meta (NASDAQ:META) indicated that they could spend a cumulative $364 billion in capex for their respective current fiscal years.  A lot of this could translate into more demand for ASML. Notably, ASML’s largest customer, TSMC, reported 37% year-over-year revenue growth through August 2025. This strong revenue growth is driven by advanced nodes like 3nm and 5nm, and the ramp-up of 2nm chips is expected to further drive demand for ASML’s EUV tools.

Is The Stock A Buy?

ASML stock trades at 36x estimated FY2025 earnings, which is a slightly elevated multiple, but there are positives for the stock. ASML’s revenues are on track to grow by a relatively strong 14% this year, per consensus estimates. Over the last quarter, ASML reported net bookings of 5.5 billion euros ($6.4 billion), about 25% ahead of forecasts, and a record 33 billion euro backlog ($38 billion). With 12 to 18 month lead times for most of its products, today’s orders should actually reflect customer confidence well into 2026, boding well for future revenue growth. Moreover, the company’s dominant position, cutting edge and highly proprietary technology, and exposure to the generative AI trend could also make the stock attractive.

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