ASML's 59% Rally: Is the Semiconductor Giant Still a Buy at New All-Time Highs?

ASML Holding N.V. (ASML), the Dutch semiconductor equipment giant, has surged 59% year-to-date, driven by robust demand for its cutting-edge lithography systems and the AI-driven semiconductor boom. However, with the stock trading at a trailing price-to-earnings (P/E) ratio of 36.77 and a forward P/E of 37.04, investors are questioning whether the rally has priced in all the company's long-term potential-or if the stock is now overvalued. This analysis evaluates ASML's strategic valuation and growth drivers to determine whether it remains a compelling buy at current levels.

Strategic Valuation: A Premium Justified by Growth?

ASML's valuation metrics appear elevated compared to industry benchmarks. Its enterprise value-to-EBITDA (EV/EBITDA) ratio of 28.11 exceeds the semiconductor industry's 5-year average of 26.04x according to industry analysis and significantly outpaces the 9.4x multiple for companies with EBITDA in the $1–$3 million range as reported by industry sources. Meanwhile, its PEG ratio of 2.17 (based on 5-year expected growth) suggests the stock is overvalued relative to its earnings growth projections as per market analysis. In contrast, the broader semiconductor industry trades at a PEG ratio of 0.55 according to industry data, indicating it is undervalued relative to its growth expectations.

However, these comparisons mask ASML's unique position in the market. The company dominates the EUV lithography segment, with a 72.5% global market share, and its systems are indispensable for manufacturing chips below 2nm-a critical threshold for sustaining Moore's Law. The EUV market, valued at $8.66 billion in 2024, is projected to grow to $33.91 billion by 2034, driven by AI and high-performance computing (HPC) demand. ASML's ability to capture this growth, coupled with its near-monopoly in EUV technology, may justify a premium valuation.

Long-Term Growth Drivers: Innovation and Industry Tailwinds

ASML's strategic initiatives underscore its commitment to maintaining its technological edge. In Q3 2025, the company invested €1.2 billion in R&D, a 15% increase year-over-year, to advance High-NA EUV systems. These next-generation tools, such as the TWINSCAN EXE:5200, enable sub-2nm manufacturing and reduce multi-patterning steps, directly addressing the industry's need for cost-effective scaling. SK hynix has already installed its first High-NA system for production, signaling early adoption.

The AI and HPC sectors are further amplifying demand for ASML's systems. According to a report by Financial Content, ASML's EUV lithography is critical for producing the advanced chips required to train large AI models and power HPC workloads. The company's partnership with Mistral AI to integrate artificial intelligence into its systems aims to enhance productivity and yield for customers as reported in the company's Q3 results. Additionally, ASML's recent launch of the TWINSCAN XT:260 for advanced packaging-a $10–$75 million revenue segment-demonstrates its ability to diversify into adjacent markets.

Industry tailwinds are equally compelling. ASML anticipates a "memory super-cycle" fueled by AI adoption, which increases lithography intensity in both logic and DRAM applications. The company's CEO, Christophe Fouquet, has highlighted growing momentum in EUV adoption and a potential memory-driven sales rebound in 2026 according to company statements. With AI-driven demand expected to push ASML's annual sales to €44–€60 billion by 2030, the long-term growth trajectory appears robust.

Risk Considerations and Valuation Trade-offs

While ASML's growth story is compelling, its valuation raises concerns. The PEG ratio of 2.17 implies investors are paying more than twice the earnings growth rate for the stock according to market analysis, a premium that may not be sustainable if growth slows. Additionally, the semiconductor industry's P/E ratio of 38x according to market data-close to its 3-year average of 51.1x-suggests the sector is in a growth phase, but not necessarily undervalued.

However, ASML's dominance in EUV and its role in enabling AI/HPC infrastructure provide a moat that few peers can match. The company's gross margin of 51.6% in Q3 2025 and its ability to maintain pricing power in a capital-intensive industry further strengthen its case. For investors with a long-term horizon, the current valuation may reflect not just today's growth but also the company's potential to lead the next decade of semiconductor innovation.

Conclusion: A Buy for the Long-Term Visionary

ASML's 59% rally has brought its valuation to levels that appear rich by traditional metrics. Yet, the company's leadership in EUV lithography, its strategic investments in High-NA systems, and the explosive demand from AI and HPC sectors suggest that the premium is warranted for now. While the PEG ratio and EV/EBITDA multiple signal caution, the semiconductor industry's structural shift toward advanced nodes and the inevitability of AI-driven compute demand position ASML as a critical player in the global tech ecosystem.

For investors who can stomach the valuation premium and are aligned with the long-term trajectory of Moore's Law, ASML remains a compelling buy-even at all-time highs. The question is not whether the stock is expensive, but whether the company's growth story is expensive enough to justify the price.