Key Takeaways
- ASML’s U.S. shares have declined 7% over the last 30 days amid a broader semiconductor sector rotation away from AI-linked names.
- TD Cowen’s Krish Sankar maintains a Buy recommendation with a €1,500 price target (approximately $1,735) on the stock.
- The company’s valuation premium compared to semiconductor equipment rivals has contracted from 120% to roughly 20% since the end of 2022.
- Upcoming generations of logic and memory chips are projected to increase dependence on ASML’s extreme ultraviolet lithography systems.
- Jensen Huang of Nvidia recently projected $1 trillion in AI chip orders extending through 2027, strengthening the outlook for ASML’s equipment.
ASML has retreated from its peak levels, creating what at least one Wall Street analyst characterizes as an attractive entry point. TD Cowen’s Krish Sankar described the current environment as “very attractive,” highlighting a more reasonable valuation combined with robust long-term growth prospects linked to artificial intelligence semiconductor demand.
Shares of ASML trading in the United States have fallen 7% during the past month. The decline occurred as market participants shifted away from chip stocks connected to artificial intelligence expansion, despite ASML delivering record-breaking bookings for its lithography equipment.
The Dutch company occupies a strategic position within the semiconductor manufacturing ecosystem. It maintains an effective monopoly on extreme ultraviolet (EUV) lithography technology, the critical machinery required for producing cutting-edge processors. ASML stands alone in this capability.
Beginning in late 2022, ASML’s valuation multiple relative to semiconductor capital equipment competitors such as Applied Materials, Lam Research, and KLA Corp has contracted from 120% to approximately 20%. Sankar attributes this compression to current chip production techniques that utilize fewer of ASML’s EUV systems per wafer.
However, Sankar contends this dynamic is poised to shift. Future node transitions in both logic semiconductors and memory technology—particularly DRAM—will require additional EUV patterning layers. He emphasizes that the memory component is especially “underappreciated” by market participants.
High-NA EUV Systems: The Upcoming Catalyst
ASML’s latest generation equipment, the High-NA EUV platforms, remains in the early stages of commercial deployment. The company reported revenue from only two of these advanced units during the fourth quarter of 2025, against a backdrop of 94 conventional lithography systems delivered in the identical timeframe.
TSMC has demonstrated hesitation regarding public commitments to High-NA EUV adoption. The foundry leader has indicated it can maximize the utility of current-generation equipment. Nevertheless, Sankar anticipates that enhanced system reliability will ultimately drive customer adoption.
TD Cowen’s model projects 60 lithography system shipments during 2026, expanding to 68 units in 2027 as High-NA installations double and older platforms transition to upgraded configurations.
Sankar assigns a Buy rating to ASML’s Amsterdam-traded shares with a €1,500 valuation target, derived from 48 times his 2027 earnings per share projection. ASML’s Amsterdam shares traded at €1,165 on Thursday. The American depositary receipts declined 1.4% to $1,347.40 during premarket activity.
Artificial Intelligence Investment Supports Sustained Demand
The fundamental demand environment for ASML continues to show strength. Nvidia CEO Jensen Huang, presenting at GTC 2026 on March 16, elevated his artificial intelligence chip order projection to a minimum of $1 trillion extending through 2027. Broadcom CEO Hock Tan has independently projected $100 billion in AI semiconductor revenue for fiscal year 2027.
Amazon, Microsoft, Google, and Meta are anticipated to deploy nearly $600 billion in combined capital expenditures during 2026, with substantial allocations directed toward AI infrastructure investments.
ASML also generates dependable recurring revenue. Service and maintenance of its existing installed equipment base represented approximately one-quarter of aggregate 2025 revenue.
ASML presently commands a forward price-to-earnings multiple of 39.8, exceeding its 10-year median of 35.8. The company’s market capitalization stands at roughly $527 billion.
