ASML shares took a hit last week, after the company had risen in January to become Europe’s largest listed company. That has once again fuelled the question of whether the Dutch chip-equipment maker has become too big, too loved and too expensive. But how convincing are those doubts, really?
Last week, ASML shares slipped from a high of 1239 euro to a low of 1127 euro. Just days earlier, the Dutch chip-equipment maker became Europe’s largest listed company by market value, crossing 500 billion dollars for the first time. On Friday, the shares edged higher, recouping part of those losses.
In a recent note to clients, analysts at Robeco raised the question of whether ASML risks falling victim to a so-called winner’s curse, pointing to recent European precedents. LVMH reached a market value of about 450 billion euro in 2023 before sliding back to roughly 270 billion euro, while Novo Nordisk briefly topped 600 billion euro in 2024 and now trades closer to 160 billion euro. “Let’s be happy for now that things are going so well for the pride of the Netherlands,” the Robeco analysts wrote.
In ASML’s case, however, that concern has so far found little traction, despite last week’s sell-off. Bloomberg data show zero sell recommendations on the stock and only a small number of hold or neutral ratings, with most analysts continuing to rate the shares a strong buy.
One of the clearest bullish outlooks comes from CJ Muse, managing director and semiconductor analyst at Cantor Fitzgerald. ASML’s share price could “easily double” from current levels over the medium term if industry investment develops as he expects, he said. Asked to explain why some analysts remain cautious - after those with neutral or hold ratings declined requests by Investment Officer to elaborate - Muse argues that some market participants underestimate the scale of the next semiconductor investment cycle.
Global chip revenues are now growing far faster than expected just a few years ago, driven by artificial intelligence, data centers and high-performance computing. Meeting that demand will require a sharp expansion in manufacturing capacity. Because ASML dominates the most advanced form of lithography, known as extreme ultraviolet, or EUV, it captures a disproportionate share of that spending. On Muse’s numbers, revenue growth could run well ahead of current consensus forecasts, leaving significant upside in the stock.
That conclusion is echoed by Hilco Wiersma, manager of the Add Value Fund. Wiersma predicted in 2023 that ASML would likely become the first Dutch company to reach a 1 trillion euro market value. At the time, he called it “crazy” that Dutch pension funds did not hold stakes of five percent or more.
Wiersma builds his valuation from ASML’s own long-term targets, which the company has so far always been able to meet or exceed. The company aims for revenue of 44 billion euro to 60 billion euro by 2030, compared with 32.7 billion euro in revenue today. ASML is targeting structurally higher margins, driven by scale, increasingly complex machines and a growing share of high-margin service revenue. Wiersma assumes a net profit margin of at least 35 percent, “a conservative estimate,” he said. That implies net income of around 20 billion euro in 2030.
Dividing that figure by the current share count of about 388 million produces earnings per share of roughly 51 to 52 euro. Wiersma does not factor in future share buybacks, even though ASML spends billions annually on repurchases. “In reality, the number of shares will fall,” he said, meaning earnings per share would grow faster than profits alone. Analyst consensus, he notes, has already moved slightly higher, with revenue expectations above 57 billion euro and similar margins.
The final step is valuation. For a company with ASML’s market position, as the world’s sole supplier of EUV machines and a business growing around 15 percent a year, Wiersma considers a price-earnings multiple of about 45 justified. Applying that multiple to earnings of just over 50 euro a share yields a price around 2,300 euro, implying a market value close to 1 trillion euro. Even that, he argues, is not an aggressive assumption once the growth of recurring, high-margin service revenue is taken into account.
A similar assessment comes from a managing director at a Connecticut-based hedge fund that added ASML to its portfolio this month. Speaking on condition of anonymity because the position has not yet been disclosed, he described ASML as one of the highest-quality businesses he has ever encountered.
The only material downside risk he sees is geopolitical. A military conflict over Taiwan could disrupt the semiconductor supply chain through TSMC, ASML’s most important customer. Prediction markets such as Polymarket assign roughly a 16 percent probability to a China–Taiwan military clash before 2027. The investor himself estimates the likelihood closer to 10 percent over the next five years. Short of that scenario, he said, skepticism toward ASML is largely contrarian positioning rather than a fundamental view. “For investors, the bigger risk is simply not owning the stock,” he said. “Which investor actually has a five-year horizon anyway?”