Valuation Premium Shrinks from 120% to 20%
Following a 7% decline in its U.S.-listed shares over the past month, ASML Holding has been upgraded to a 'Buy' by analysts at TD Cowen, who see the new valuation as a prime opportunity. The core of their argument rests on a dramatic compression of ASML's valuation premium compared to semiconductor equipment peers like Applied Materials and Lam Research. Since late 2022, that premium has plummeted from 120% to just 20% today.
TD Cowen analyst Krish Sankar stated the current setup makes the stock "very attractive," linking the valuation decline to recent chip manufacturing advancements that have made lighter use of ASML's core extreme ultraviolet (EUV) lithography tools. Despite the bullish call, ASML's Amsterdam-listed shares fell 3.5% to €1,128.20 on Friday, while its U.S. shares dropped 4.2% to $1,308.53.
Future EUV Demand Seen as Key Catalyst
Analysts believe the market is underappreciating future growth drivers for ASML's technology. Sankar argues that upcoming generations of both logic and memory chips will demand more intensive use of EUV tools. This view counters concerns that have weighed on the stock, including the current lighter-than-expected use of the technology.
The leading-edge foundry/logic thesis is well understood, however we believe the incorporation of EUV layers in customer’s DRAM [dynamic random-access memory] roadmaps is underappreciated.
— Krish Sankar, Analyst, TD Cowen.
TD Cowen's model projects ASML will ship 60 lithography systems in 2026, growing to 68 tools in 2027 as adoption of new High-NA units increases. The firm set a €1,500 price target on the stock, based on a price-to-earnings multiple of 48 times its 2027 earnings per share forecast. While major customers like TSMC have been slow to commit to ASML's newest High-NA machines, the analyst team expects improving reliability to convince them to upgrade.
Edgen Stock·Mar 23 2026, 03:47
