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Zacks Investment Research <\/p>\nASML Holding ASML is trading above its 50-day simple moving average (SMA), signaling a bullish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.<\/p>\n
Shares of ASML Holding have gained 11% in the past three months, outperforming the industry\u00a0and the Zacks S&P 500 composite. The stock has, however, underperformed its sector\u00a0in the same time frame. ASML shares are trading at a discount to their 52-week high.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
ASML Holding is one of the most strategically important companies in the global semiconductor ecosystem. It has a solid dominance in extreme ultraviolet (EUV) lithography systems. The outlook for the semiconductor industry continues to gain strength, driven primarily by AI-related infrastructure investment. These investments are increasing demand for advanced Logic and Memorychips in many areas. With a compelling portfolio, management believes demand remains strong for the entire product portfolio.<\/p>\n
Shares of KLA Corporation KLAC and Applied Materials AMAT have rallied 25.7% and 22.2% in the past three months, respectively, in the same time frame.<\/p>\n
ASML Shares Are Not Expensive <\/p>\n
The stock is undervalued compared with its industry. It is currently trading at a price-to-earnings multiple of 37.04, lower than the industry average of 37.12 and the median of 37.27 over the past three years. It has a Value Score of F.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
ASML shares are more expensive than those of Applied Materials but cheap when compared with KLA Corporation.<\/p>\n
The Case for ASML Stock <\/p>\n
ASML continues to benefit from strong demand for its wafer fabrication equipment, fueled by the growing adoption of advanced chips across AI data centers and hyperscalers. Management expects end-market trends to drive a richer product mix, with increasing demand for advanced lithography systems and higher lithography intensity.<\/p>\n
The company believes its flexible and comprehensive portfolio is well-positioned to meet evolving customer requirements. By extending holistic lithography capabilities, supporting 3D integration, enhancing the performance and cost efficiency of both deep ultraviolet (DUV) and extreme ultraviolet (EUV) systems, and scaling EUV technology well into the next decade, ASML aims to maintain its technological edge.<\/p>\n
Artificial intelligence remains a significant long-term growth driver for ASML. AI applications require increasingly powerful semiconductors, including advanced GPUs and high-bandwidth memory chips, whose production relies heavily on EUV lithography. This trend is expected to sustain strong demand for ASML\u2019s systems over time.<\/p>\n
From a financial standpoint, ASML combines strong profitability with resilient cash generation. Its high-value systems, recurring service revenues and large installed base support stable margins and earnings visibility. In addition, the company\u2019s substantial backlog provides strong visibility into future revenue growth.<\/p>\n
ASML also remains committed to delivering shareholder value through steadily growing dividends and ongoing share repurchase programs.
However, risk remains. Several companies have now started offering etching tools and are securing contracts according to their expertise.<\/p>\n
ASML\u2019s Growth Prospects Solid <\/p>\n
The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a 23.6% and 20.1% increase year over year, respectively.\u00a0<\/p>\n
The consensus estimate for fiscal 2026 and 2027 earnings implies a 32.7% and 29.5% year-over-year increase, respectively.\u00a0\u00a0<\/p>\n
ASML expects second-quarter 2026 total net sales between \u20ac8.4 billion and \u20ac9.0 billion, and a gross margin between 51% and 52%.<\/p>\n
ASML estimates 2026 total net sales to be between \u20ac36 billion and \u20ac40 billion, with a gross margin between 51% and 53%.<\/p>\n
Over the long run, ASML envisions achieving 2030 annual revenues between approximately \u20ac44 billion and \u20ac60 billion, with a gross margin between approximately 56% and 60%.<\/p>\n
Northbound Analyst Sentiment on ASML <\/p>\n
The consensus estimate for 2026 and 2027 earnings has moved 7.6% and 7.3% north in the last 30 days.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
The consensus estimates for KLA Corporation\u2019s and Applied Materials\u2019 2026 and 2027 earnings have moved north in the last 30 days.<\/p>\n
Parting Thoughts on ASML Shares <\/p>\n
ASML is well-positioned for growth, supported by its leadership in EUV technology and a strong order backlog. Long-term tailwinds from AI, cloud computing, and advanced semiconductor manufacturing continue to reinforce its outlook, while positive analyst sentiment further strengthens confidence in the company\u2019s growth trajectory.<\/p>\n
Given a discounted valuation, it is better to add this Zacks Rank #2 (Buy) stock now. You can see the complete list of today\u2019s Zacks #1 Rank (Strong Buy) stocks here.<\/p>\n
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report<\/a><\/p>\n KLA Corporation (KLAC) : Free Stock Analysis Report<\/a><\/p>\n ASML Holding N.V. (ASML) : Free Stock Analysis Report<\/a><\/p>\n Applied Materials, Inc. (AMAT) : Free Stock Analysis Report<\/a><\/p>\n This article originally published on Zacks Investment Research (zacks.com).<\/a><\/p>\n