Key Takeaways
- ASML’s American depositary shares have declined 7% over the last 30 days amid broader rotation out of AI-linked semiconductor equities.
- TD Cowen’s Krish Sankar maintains a Buy recommendation on ASML with a €1,500 price objective (approximately $1,735).
- The company’s valuation premium relative to semiconductor equipment competitors has contracted from 120% to approximately 20% since Q4 2022.
- Next-generation logic processors and DRAM memory chips will demand increased deployment of ASML’s EUV lithography technology.
- Nvidia CEO Jensen Huang projects at least $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 at least one Wall Street analyst who sees significant value at current prices. TD Cowen’s Krish Sankar characterized the present situation as “very attractive,” highlighting compressed multiples alongside robust long-term expansion tied to artificial intelligence semiconductor requirements.
Shares of ASML trading in the United States have retreated 7% during the past month. This decline occurred as market participants shifted capital away from semiconductor names exposed to the AI expansion, despite ASML posting unprecedented order volumes for its specialized lithography equipment.
The Dutch company occupies a critical position within the chip manufacturing ecosystem. ASML maintains an effective monopoly on extreme ultraviolet (EUV) lithography platforms, the sophisticated machinery required to produce cutting-edge semiconductors. The company faces zero direct competition in this space.
ASML’s valuation multiple relative to semiconductor capital equipment rivals including Applied Materials, Lam Research, and KLA Corp has compressed dramatically from 120% to approximately 20% since late 2022. Sankar attributes this contraction to current chip fabrication techniques that utilize fewer of ASML’s EUV processing steps.
However, Sankar contends this dynamic is poised to shift. Upcoming generations of both logic semiconductors and memory technologies — particularly DRAM — will require substantially more EUV processing layers. The analyst emphasizes that the memory segment opportunity remains “underappreciated” by Wall Street.
High-NA EUV: The Emerging Catalyst
ASML’s most advanced platforms, the High-NA EUV systems, remain in preliminary commercial deployment. The company reported revenue recognition from only two of these advanced units during Q4 2025, compared with 94 conventional lithography systems delivered in the identical timeframe.
TSMC has remained circumspect regarding public commitments to High-NA EUV technology. The foundry giant has indicated it can maximize existing equipment utilization. Nevertheless, Sankar anticipates that enhanced reliability metrics of the new platforms will ultimately drive customer adoption.
TD Cowen’s financial model projects 60 lithography system shipments in 2026, expanding to 68 units in 2027 as High-NA installations double and legacy models transition to upgraded configurations.
Sankar maintains his Buy rating on ASML’s Amsterdam-listed shares with a €1,500 price objective, calculated at 48 times his 2027 earnings per share estimate. ASML’s Amsterdam shares traded at €1,165 on Thursday. The U.S.-listed depositary shares declined 1.4% to $1,347.40 in premarket activity.
AI Capital Expenditures Support Multi-Year Demand
The demand environment for ASML’s products remains robust. Nvidia CEO Jensen Huang, presenting at GTC 2026 on March 16, elevated his AI processor order projection to at least $1 trillion extending through 2027. Broadcom CEO Hock Tan has independently forecast $100 billion in AI semiconductor revenue for fiscal 2027.
Amazon, Microsoft, Google, and Meta are anticipated to deploy nearly $600 billion in combined capital expenditures during 2026, with substantial allocation toward AI computing infrastructure.
ASML also generates predictable recurring revenue. Service contracts for its deployed machine base represented approximately 25% of total 2025 revenue.
ASML currently commands a forward price-to-earnings ratio of 39.8, exceeding its 10-year median of 35.8. The company’s market capitalization stands at approximately $527 billion.
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