ASML Holding Rises 10% YTD: Is the Stock Worth a Good Buy?

ASML Holding ASML has delivered a solid year-to-date (YTD) gain of 10%. This performance easily beats the broader Zacks Computer and Technology sector, which rose a mere 1.5% in the same period.

ASML Holding stock has also moved ahead of several semiconductor peers, including NVIDIA Corporation NVDA, Intel Corporation INTC and Advanced Micro Devices, Inc. AMD. YTD, shares of NVIDIA, Intel and Advanced Micro Devices have risen 8.1%, 7.1% and 5%, respectively.

This outperformance shows investors are increasingly confident in ASML Holding’s long-term story, even during a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and ASML’s long-term outlook justifies a buy position for now.

ASML YTD Price Return Performance

ASML’s EUV Technology: A Big Advantage

ASML’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-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.

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.

AI Demand Gives ASML More Room to Grow

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.

As cloud providers, data centers and tech giants expand their AI infrastructure, ASML Holding’s lithography tools will be in greater demand. This AI-driven semiconductor expansion ensures long-term growth tailwinds for ASML, making it a compelling buy.

Strong Financials Show ASML’s Resilience

ASML Holding’s first-quarter 2025 financial results demonstrated its resilience amid the ongoing macroeconomic uncertainties. The company posted €7.74 billion in net sales, marking a 46% year-over-year increase. Net income surged 92% to €2.36 billion, while earnings per share (EPS) grew 93% to €6.00, highlighting ASML’s operational efficiency.

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

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

The gross margin expanded 300 basis points year over year to 54%, driven by strong cost management and improved productivity in its advanced lithography systems. This margin expansion reflects ASML’s ability to maintain profitability, even in a challenging macro environment.

ASML Holding’s 2025 guidance also signals confidence in its future growth. The company expects 15% revenue growth for the year, driven by the rising demand for both EUV and DUV (deep ultraviolet) lithography systems. Additionally, ASML forecasts a 70-basis-point margin expansion in 2025, indicating higher profitability ahead.

ASML’s Valuation: Reasonable for Its Strength

ASML stock currently trades in line with the sector. Its forward 12-month price-to-earnings (P/E) ratio of 26.37 almost matches the sector’s average of 26.28.

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 41.68X, 30.57X and 26.75X, respectively.

Final Take: ASML Remains a Buy

ASML’s leadership in EUV technology, strong finances 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. The stock looks worth buying for long-term investors.

ASML carries a Zacks Rank #2 (Buy) 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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