Key Takeaways
- ASML’s U.S. shares have declined 7% over the last month amid broader rotation away from AI-linked semiconductor names.
- TD Cowen’s Krish Sankar maintains a Buy rating with a €1,500 price target (approximately $1,735).
- The company’s valuation premium versus competitors has contracted from 120% to approximately 20% since the end of 2022.
- Next-generation logic and DRAM chips are projected to demand increased deployment of ASML’s EUV technology.
- Nvidia CEO Jensen Huang recently projected $1 trillion in AI chip orders extending through 2027, strengthening ASML’s long-term demand outlook.
ASML’s recent retreat from peak levels has caught the attention of analysts who view the pullback as an attractive entry point. TD Cowen’s Krish Sankar characterized the current opportunity as “very attractive,” highlighting the company’s compressed valuation relative to its robust long-term growth trajectory driven by AI chip manufacturing demand.
Shares of ASML trading in the United States have retreated 7% during the previous month. The decline occurred as market participants shifted away from semiconductor equities linked to artificial intelligence expansion, despite ASML posting record-breaking orders for its lithography equipment.
The Dutch company occupies a critical position within the semiconductor manufacturing ecosystem. It maintains an effective monopoly on extreme ultraviolet (EUV) lithography technology, the essential machinery required to produce cutting-edge chips. No competitor currently manufactures these systems.
Since the conclusion of 2022, ASML’s valuation premium compared to semiconductor equipment manufacturers 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.
However, Sankar contends this dynamic is poised to shift. Upcoming generations of both logic semiconductors and memory chips—particularly DRAM—will require additional EUV layers. He emphasizes that the memory component is especially “underappreciated” by investors.
High-NA EUV: Emerging Revenue Stream
ASML’s latest generation equipment, the High-NA EUV platforms, remains in the initial stages of commercial deployment. The company reported revenue from only two High-NA units during Q4 2025, compared to 94 conventional lithography systems delivered in that same quarter.
TSMC has maintained a measured approach regarding public adoption of High-NA EUV technology. The foundry giant has indicated it can maximize the utility of current-generation equipment. Nevertheless, Sankar anticipates that enhanced reliability of the advanced systems will ultimately drive customer adoption.
TD Cowen projects 60 lithography system shipments in 2026, expanding to 68 units in 2027 as High-NA installations double and legacy models transition to upgraded versions.
Sankar maintains a Buy recommendation on ASML’s Amsterdam-traded shares with a €1,500 price objective, calculated at 48 times his projected 2027 earnings per share. ASML’s Amsterdam shares were trading at €1,165 on Thursday. The U.S.-listed shares declined 1.4% to $1,347.40 during premarket hours.
AI Infrastructure Investment Strengthens Demand Outlook
The fundamental demand environment for ASML remains robust. Nvidia CEO Jensen Huang, presenting at GTC 2026 on March 16, elevated his AI chip order projection to a minimum of $1 trillion extending through 2027. Broadcom CEO Hock Tan has independently forecasted $100 billion in AI chip 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 development.
ASML also generates stable recurring revenue through servicing activities. Maintenance of its installed equipment base represented approximately 25% of total 2025 revenues.
ASML currently commands a forward price-to-earnings ratio of 39.8, elevated compared to its 10-year median of 35.8. The company’s market capitalization stands at roughly $527 billion.
