ASML Holding (Nasdaq: ASML) is a little-known mainstay in the world of semiconductor manufacturing. If you’ve never heard of this Dutch tech giant, you’re not alone… but without its machines, your smartphone and laptop wouldn’t exist.
ASML creates the advanced lithography systems that semiconductor companies need in order to etch microscopic patterns onto their chips. The company is the ultimate pick-and-shovel play in the tech world. Instead of mining for gold – that is, manufacturing chips – itself, it sells the essential tools that every “miner” needs.
Looking at the stock chart, we can see ASML has been on a wild ride.
After soaring to over $1,000 in mid-2024, the stock tumbled toward $600 by the end of the year, only to bounce back above $700 more recently. This volatility has many investors wondering whether now is the time to buy.
The company’s recent financial performance certainly looks impressive. In the first quarter of 2025, ASML reported total net sales of 7.7 billion euros (about $8.7 billion) and net income of 2.4 billion euros ($2.7 billion).
Even more encouraging was its strong gross margin of 54%, which topped guidance thanks to a favorable product mix and hitting key performance milestones. The company also secured 3.9 billion euros ($4.4 billion) in new bookings, including 1.2 billion euros ($1.3 billion) for its state-of-the-art “extreme ultraviolet” systems.
For the full year, management expects sales between 30 billion and 35 billion euros ($32 billion to $38 billion), with AI remaining the primary growth driver.
ASML also just shipped its fifth “high NA” system, an advanced technology that customers are raving about. Intel reported that these cutting-edge machines could shorten certain manufacturing processes from 40 steps to less than 10, slashing production complexity and boosting efficiency. Samsung noted the technology could reduce cycle time by 60%, representing a massive leap forward in manufacturing capability.
But what about the stock’s valuation?
ASML’s enterprise value-to-net asset value (EV/NAV) ratio sits at 10.93, which is 91% higher than the average of 5.72 for similar companies. Normally, that would raise serious red flags.
However, there’s a good reason for the higher price tag. ASML’s quarterly free cash flow averages 13.6% of its net assets – nearly triple the 4.61% average for similar companies. In other words, ASML is squeezing almost three times more cash from each dollar of assets than its peers.
When we combine these metrics with the company’s clear technology leadership, its near-monopoly position in the technologies that are essential for making cutting-edge chips, and its shareholder-friendly policies (including a 4.9% dividend increase in 2024), the current valuation makes sense.
For now, The Value Meter rates ASML Holding as “Appropriately Valued” – not cheap enough to back up the truck, but certainly not overpriced.
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