Diverging Views Emerge on ASML’s Valuation

Investors in ASML Holding NV, the Dutch technology leader commanding a monopoly in critical EUV lithography systems essential for manufacturing advanced AI chips, are facing conflicting guidance from market analysts. A stark contrast in recommendations appeared over a single weekend, creating uncertainty for shareholders.

The divergence began on Friday, November 7, when Rothschild Redburn elevated its rating for ASML from "Neutral" to "Buy." The research firm cited significant advancements in ASML's cutting-edge HNA-EUV technology, which is becoming indispensable for producing next-generation artificial intelligence semiconductors. This technological edge secures ASML's unique position, as no other company globally possesses this manufacturing capability.

Merely two days later, a contrasting analysis published on Seeking Alpha advised caution, downgrading the stock to a "Hold" recommendation. This conservative stance points to the equity's powerful performance over the preceding three months, during which it surged approximately 40%. This rally has propelled the price-to-earnings (P/E) ratio to around 37, a level substantially above its historical average, raising questions about whether the stock has become overvalued.

Management Affirms Strategic Importance of Chinese Market

Amid this analytical debate, ASML's management delivered a clear statement regarding its strategic direction. Shen Bo, Executive Vice President and China Country Manager, emphasized on Friday the continued, undiminished importance of the Chinese market. The company projects that China will contribute more than 25% of its total sales in 2025.

Should investors sell immediately? Or is it worth buying ASML?

Shen acknowledged that China's recent revenue share was unusually high, attributed to the fulfillment of a substantial order backlog. However, the underlying message was unequivocal: China represents a healthy and essential component of the global semiconductor ecosystem. This affirmation is particularly notable given the ongoing geopolitical tensions and Western export controls that ASML must carefully navigate.

Balancing Impressive Growth Against Lofty Valuation

ASML has demonstrated a remarkable performance in 2025, with its shares climbing roughly 48% since the start of the year. This upward trajectory is fueled by exploding demand for sophisticated chips required for artificial intelligence applications. Supporting this optimism, the company reported net bookings of €5.4 billion for the third quarter and reaffirmed its expectation to increase annual revenue for 2025 by approximately 15% compared to 2024.

The coming days may provide further market catalysts, with ASML's management scheduled to participate in several investor conferences starting November 11. These include the Daiwa HK Conference and the Morgan Stanley European TMT Conference. While some market experts anticipate a deceleration in earnings growth for 2026, they have recently revised their estimates upward.

Currently trading near its 52-week high, ASML's stock price perfectly encapsulates the ongoing tug-of-war between market optimists and valuation skeptics. The central question remains whether the prevailing euphoria surrounding artificial intelligence is sufficiently robust to justify its current premium valuation.