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Zacks Investment Research <\/p>\nASML Holding ASML shares have returned 23.1% in the year-to-date period, outperforming the Zacks Computer and Technology Sector\u2019s decline of 6.1%. However, the stock has underperformed its wafer fabrication equipment peers, including KLA Corporation KLAC, Lam Research LRCX and Applied Materials AMAT, each of which has returned 24.9%, 27.6% and 35.8%, respectively, in the same time frame.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
Due to the rise in stock price, the stock is now trading at a premium with its Forward 12-month Price to Sales (P\/S) ratio of 11.24, which is significantly higher than the sector\u2019s P\/S of 5.81X. The overvaluation is further substantiated by the Zacks Value Score of F. Given the overvaluation, investors are now wondering if it’s the right time to invest in ASML stock. Let\u2019s discuss the fundamentals before we make the next move.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
ASML rides on the back of high demand for its wafer equipment manufacturing products, driven by the rising use of advanced chips by AI data centers and hyperscalers. ASML\u2019s net systems sales increased 12.4% year over year in 2025. The growth was mainly driven by the expansion of the logic and memory semiconductor market, which is the backbone of the AI data centers.<\/p>\n
While logic contributed to 66% of the top line, memory contributed the remaining. ASML\u2019s extreme ultraviolet (EUV) lithography technology contributed 48% to the top line, while deep ultraviolet (DUV) contributed 49%, and the remaining was covered by ASML\u2019s metrology and inspection tools. ASML\u2019s technologies like Argon Fluoride Immersion, Argon Fluoride Dry, Krypton Fluoride and Mercury I-line contributed 42%, 2%, 4% and 1%, respectively, in 2025.<\/p>\n
While DUV still contributed more than EUV in ASML\u2019s 2025 top line, the EUV share has grown rapidly to contribute 48% of the 2025 top line, much higher than 38% contribution of ASML\u2019s 2024 top line. As the industry moves from 4nm to 3nm to 2nm nodes, chip manufacturers would shift from multi-patterning DUV to single-exposure EUV. The EUV technology is experiencing the highest traction among DRAM customers, followed by high bandwidth memory and DDR.<\/p>\n
As the demand for AI applications increased, memory production was redirected toward high-margin AI applications, resulting in supply shortage of memory chips in late 2025. Rising production of HBM and DDR5, is also acting as a tailwind for ASML. However, weakness in consumer electronics is a drag for ASML, and the company is de-risking its business by focusing on high-margin AI-related processes. Other challenges, like competitive pressure, also pose a concern for investors.<\/p>\n
While ASML is an unchallenged player in the lithography space, the broader semiconductor equipment market has multiple players who pose a threat to this company. Several companies have now started offering etching tools and are securing contracts for their expertise. Lam Research secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures.<\/p>\n
Lam Research\u2019s customers have invested in DDR5, LPDDR5 and high-bandwidth memory. Lam Research\u2019s Aether dry-resist technology was recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment. Applied Materials also supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes.<\/p>\n
Applied Materials specializes in Gate-All-Around transistors at 2nm and below, Backside power delivery, Advanced wiring and interconnect, HBM stacking and hybrid bonding and 3D device metrology, which are indispensable for manufacturing next-generation semiconductor chips. Another player in the broader WFE market is KLA Corporation.<\/p>\n
KLA Corporation\u2019s advanced packaging business has become a major growth driver, fueled by the AI boom and rising demand for high-performance computing and high-bandwidth memory (HBM). However, ASML\u2019s venture into sub-2nm production with High Numerical Aperture (High-NA) EUV systems is the next technological leap for chipmakers. ASML\u2019s High-NA machines will be central to that shift.<\/p>\n
Higher adoption of EUV technology will also push the installed base revenues up. The company also ended 2025 with a \u20ac38.8 billion backlog, providing strong visibility in the revenue pipeline. The Zacks Consensus Estimate for ASML\u2019s 2026 revenue and earnings implies growth of 19% and 21%, respectively. The Zacks Consensus Estimates for ASML\u2019s 2026 earnings have been revised upward in the past 30 days.<\/p>\n
Zacks Investment Research <\/p>\n
Image Source: Zacks Investment Research<\/p>\n
ASML remains a fundamentally strong player, supported by its leadership in EUV technology, robust order backlog and rising demand from AI-driven semiconductor investments. However, the stock\u2019s current premium valuation limits near-term upside and raises concerns for new investors. Given these factors, we suggest that investors should hold ASML stock now. ASML carries a Zacks Rank #3 (Hold) at present. 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 Lam Research Corporation (LRCX) : 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