ASML's Declining Short Interest and What It Signals for Long-Term Investors

The recent decline in short interest for ASML Holding NV (ASML) has sparked renewed optimism among long-term investors, signaling a potential shift in market sentiment toward the semiconductor giant. As of December 15, 2025, ASML's short interest stood at 1.21 million shares, representing just 0.31% of its public float-a 9.46% drop compared to the prior report. This decline, coupled with a short interest ratio (days to cover) of 0.9, suggests that bearish bets on the stock are waning, creating a favorable backdrop for strategic investment.

A Bearish Retreat: Interpreting the Numbers

Short interest is a critical barometer of market sentiment. When short sellers reduce their positions, it often reflects growing confidence in a stock's fundamentals or broader industry trends. For ASML, the 9.46% decline in short interest since the previous reporting period indicates that investors are increasingly wary of the risks associated with maintaining short positions in a company that dominates the semiconductor equipment sector.

The low short float of 0.31% further underscores this trend. By comparison, peers in the machinery and tech sectors, such as Carrier Global Corporation and JBT Marel Corporation, have short floats of 1.42% and 6.02%, respectively. ASML's significantly lower short float implies that the stock is less vulnerable to bearish pressure, reducing the likelihood of a destabilizing short squeeze. Additionally, the short interest ratio of 0.9-meaning it would take just 0.9 days of average trading volume (1.63 million shares) to cover all short positions-suggests that even if short sellers were to scramble to unwind their bets, the market impact would be minimal.

Institutional Short Positions: A Closer Look

While institutional short positions in ASML remain relatively modest, they are not absent. As of December 2025, entities such as Tudor Investment Corp ET AL, Cantor Fitzgerald L. P., and Citadel Advisors LLC have reported short positions in the stock. However, the recent decline in short interest suggests that these institutions are either reducing their exposure or reallocating capital to other opportunities. This shift aligns with broader industry dynamics, where ASML's leadership in extreme ultraviolet (EUV) lithography and its robust order backlog have insulated it from macroeconomic headwinds.

Comparative Industry Metrics: ASML's Relative Strength

ASML's short interest metrics stand out when compared to its peers. For instance, while the average short interest ratio in the semiconductor sector hovers around 2.5–3.5 days to cover, ASML's ratio of 0.9 is exceptionally low. This disparity highlights the company's strong institutional support and limited bearish conviction. Furthermore, the stability of ASML's short borrow fee rate at 0.25%-a metric that reflects the cost of borrowing shares for shorting-indicates that lenders are not demanding premium rates to facilitate short positions, another sign of reduced bearish activity.

Strategic Implications for Long-Term Investors

For long-term investors, ASML's declining short interest presents a compelling case for strategic entry. The reduction in bearish bets suggests that the market is beginning to price in ASML's resilience amid global supply chain challenges and its pivotal role in advancing chip manufacturing technologies. A short interest ratio of 0.9 also mitigates the risk of a short squeeze, which could otherwise drive volatility. Instead, the current dynamics point to a stock that is gaining favor among bulls, with institutional investors and retail traders alike recognizing its long-term value proposition.

Moreover, the off-exchange short volume of 70,542 shares as of December 29, 2025-45.05% of which came from exempt trades-further reinforces the idea that short sellers are adopting a cautious approach. Exempt trades, often executed by large institutions, are less likely to trigger immediate market reactions, reducing the potential for sudden price swings.

Conclusion

ASML's declining short interest, low short float, and favorable short interest ratio collectively paint a picture of growing bullish sentiment and reduced bearish risk. While institutional short positions persist, their scale is dwarfed by the broader market's confidence in the company's fundamentals. For long-term investors, this represents a rare opportunity to capitalize on a stock that is not only outperforming its peers but also benefiting from a shifting short-selling landscape. As the semiconductor industry continues to evolve, ASML's position as a short-seller's nightmare may prove to be one of its most underrated advantages.