ASML Stock: Buy Now or Brace for Impact?

Tech's silent kingpin faces its ultimate test as chip wars intensify.

The lithography giant powers every advanced semiconductor on earth—from AI chips to crypto miners. No ASML, no Moore's Law. No Moore's Law, no tech revolution.

But monopoly power brings monopoly-sized risks. Geopolitical tensions threaten export controls. R&D costs skyrocket as EUV tech pushes physical limits. Clients like TSMC and Samsung demand perpetual innovation while squeezing margins.

Bull case: ASML remains the only game in town for cutting-edge chips. Demand outstrips supply for years. Bears whisper: single-point-of-failure dependencies rarely end well in geopolitics.

One thing's certain: Wall Street still prices this like a legacy equipment maker—not the company holding the entire digital economy's blueprint.

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Can ASML bounce back?

ASML's deal with Mistral seemed to breathe some new life into the stock as Arete upgraded it to a buy, andsaid that the Mistral investment could expand the stock's multiple. In recent quarters, ASML has struggled with volatile demand for its machines, including in China, though it has touted strong demand related to AI. Unlike chip designers like Nvidia or even manufacturers like TSMC, ASML is exposed to a different product cycle as a semiconductor equipment manufacturer.

In the second quarter, the company saw strong growth with revenue rising 23% to 7.69 billion euros and net income up 45% to 2.3 billion euros. Bookings in the quarter were flat at 5.5 billion euros.

For the full year, management expects revenue growth to slow, calling for 15% revenue growth for 2025. For 2030, the company continues to target 44 billion to 60 billion euros, or 52 billion at the midpoint, up from 28.3 billion in 2024. That implies a compound annual growth rate of just around 11% at the midpoint.

ASML has a competitive advantage in the industry based on technology, but the demand cycle is outside of its control. The long-term guidance is subject to change, and ASML said, "Looking at 2026, we see that our AI customers' fundamentals remain strong. At the same time, we continue to see increasing uncertainty driven by macroeconomic and geopolitical developments."

Is ASML a buy?

The Mistral AI deal is a smart MOVE as it gives ASML some direct exposure to a promising AI start-up and leverages its market power into a new revenue stream. The tailwinds from AI are encouraging as well, but near-term expectations are muted as analysts expect essentially flat growth for the second half of the year and just 4% in 2026.

Following the stock's recent rebound, ASML shares trade at a forward price-to-earnings ratio of around 30 based on current estimates.

That's pricey for a stock with single-digit revenue growth, but ASML has enough of a competitive advantage to make holding the stock worthwhile.

At this point, getting a small position in ASML makes sense as estimates are low enough over the coming quarters that the company could top expectations, sending the stock higher. Looking out further, if the AI boom continues, ASML will eventually be a winner even if it got off to a slow start.