ASML Soars 16% in a Month: Should You Buy, Sell or Hold the Stock?

ASML Holding N.V. ASML shares have rallied 15.9% over the past month. This performance easily beat the broader Zacks Computer and Technology sector, which rose 6.2% in the same period.

ASML stock has also outperformed several semiconductor peers, including Intel Corporation INTC, Advanced Micro Devices, Inc. AMD and NVIDIA Corporation NVDA. Intel stock has risen 4.7% over the past month, while shares of Advanced Micro Devices and NVIDIA have fallen 8.7% and 2.6%, respectively.

ASML One-Month Price Return Performance

However, this outperformance raises the question: Should investors buy, sell or hold ASML stock for now?

ASML’s EUV Technology: A Key Growth Tailwind

ASML Holding’s dominance in the semiconductor manufacturing sector is unchallenged. The company maintains a near-monopoly on extreme ultraviolet (EUV) lithography, which is essential for producing advanced chips at 3nm and below. Its EUV systems are crucial for leading chipmakers such as TSMC, Samsung and Intel, positioning ASML as a key enabler of cutting-edge semiconductor manufacturing.

ASML Holding’s High Numerical Aperture (NA) EUV technology represents the next frontier in chip manufacturing. Designed for sub-2nm nodes, these advanced systems will be critical for the industry’s future. While the adoption of High-NA EUV has been slower than expected, the long-term potential remains enormous. As chipmakers ramp up production of smaller, more powerful chips, ASML’s High-NA EUV tools will play a pivotal role, driving sustained demand.

ASML Holding made substantial progress in High NA EUV during the second quarter with the shipment and installation of the first EXE:5200B system. This platform is critical for enabling the 1.4nm node and beyond. Customers are validating the performance, and ASML sees High NA insertion into high-volume manufacturing, beginning in 2026-2027, offering a major long-term revenue and margin driver.

Additionally, ASML Holding is well-positioned to capitalize on the artificial intelligence (AI) revolution, which is driving massive demand for advanced semiconductors. With AI workloads requiring cutting-edge GPUs, high-bandwidth memory and AI accelerators, the demand for smaller and more powerful chips is rising. This trend plays directly into ASML’s hands, as its EUV and High-NA EUV machines are vital for manufacturing these advanced chips.

The company’s technological superiority ensures high barriers to entry, giving it a competitive moat. With EUV technology being essential for advanced semiconductor fabrication, ASML Holding’s dominance remains intact, supporting its long-term growth outlook. ASML Holding projects 30% growth in EUV revenues in 2025.

Despite the strengths, management’s commentary about an uncertain outlook for 2026 and weaker-than-expected third-quarter guidance warrants a cautious approach.

ASML Turns Cautious About 2026 Outlook

ASML Holding had a tremendous first-half 2025 with robust top and bottom-line growth in the first two quarters. The company’s latest financial results for the second quarter of 2025 saw a 23% surge in revenues and a 47% jump in EPS.

ASML Holding N.V. Price, Consensus and EPS Surprise

ASML Holding N.V. price-consensus-eps-surprise-chart | ASML Holding N.V. Quote

Despite reporting strong quarterly results, management backed away from earlier confidence about growth in 2026. Previously, ASML Holding had expected demand to keep rising, especially with AI fueling more chip production. However, on the second-quarter call, the company said that it “cannot confirm growth in 2026,” pointing to customer hesitation and ongoing market uncertainty.

During the call, ASML Holding acknowledged that ongoing U.S.-China tariff discussions, including the Section 232 tariff review, are negatively impacting customer capital spending timelines. This hesitation may delay orders and revenue recognition in late 2025 and 2026, casting doubt on near-term growth continuity.

Additionally, ASML Holding issued disappointing guidance for the third quarter. The company expects third-quarter revenues between €7.4 billion and €7.9 billion. This indicates a year-over-year increase of merely 2%, which is significantly lower than previous quarters.

Also, ASML Holding expects the third-quarter gross margin in the 50-52% range, depicting a significant decline from 53.7% in the second quarter. This sequential drop is expected mainly due to margin-dilutive High NA system revenues and fewer upgrade orders. All these factors have caused near-term uncertainty about ASML Holding’s prospects.

ASML’s Premium Valuation Warrants Caution

ASML stock currently trades at a premium valuation compared with the sector. Its forward 12-month price-to-earnings (P/E) ratio of 30.63 is higher than the sector’s average of 28.69.

ASML Forward 12-Month P/E Ratio

However, ASML Holding trades at lower P/E multiples compared with other semiconductor players, including Intel, NVIDIA and Advanced Micro Devices. Currently, Intel, NVIDIA and Advanced Micro Devices trade at P/E multiples of 47.09, 32.13 and 31.24, respectively.

Conclusion: Hold ASML Stock for Now

ASML’s leadership in EUV technology and role in powering future chipmaking keep it well-positioned for growth. With AI, high-bandwidth memory and advanced chips driving demand, ASML’s tools will remain essential. However, management’s uncertainty about the 2026 growth outlook and premium valuation warrants a cautious approach to the stock. All these factors suggest holding the stock for now.

ASML Holding carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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