Up 50% in 2025, Should You Buy ASML Stock Right Now?

• ASML has monopolized a important exertion successful chipmaking.

• It volition payment from the accelerated enlargement of the unreality and AI markets.

• Its banal isn’t cheap, but it deserves a premium valuation.

• 10 stocks we similar amended than ASML ›

ASML's (NASDAQ: ASML) banal closed astatine a grounds precocious of $1,140.92 per stock connected Dec. 3. It's pulled backmost somewhat implicit the past 2 weeks, but it's inactive up astir 50% for the year. It besides easy outperformed the Nasdaq Composite's year-to-date summation of astir 20%.

The Dutch semiconductor instrumentality shaper has go a blistery concern again arsenic bulls unreserved toward artificial quality (AI) stocks. But should you inactive bargain this high-flying banal close now?

ASML is the world's largest shaper of lithography systems, which are utilized to optically etch circuit patterns onto silicon wafers. It's besides the lone shaper of utmost ultraviolet (EUV) lithography systems, which are utilized to manufacture the world's smallest and densest chips.

These monolithic systems outgo $200-$400 cardinal and necessitate aggregate planes to ship. All of the world's apical foundries -- including TSMC (NYSE: TSM), Samsung, and Intel (NASDAQ: INTC) -- usage ASML's EUV systems to nutrient their astir precocious chips. Chipmakers that manufacture larger and little precocious chips usage ASML's older heavy ultraviolet (DUV) systems.

ASML's monopolization of this important exertion makes it a linchpin of the semiconductor market, but it besides puts it successful the crossfire of the tech warfare betwixt the U.S. and China. It's already been barred from selling its EUV systems to Chinese chipmakers since 2019, and it present faces further unit to curb its income of precocious DUV systems successful China.

That unit throttled its maturation successful China, which accounted for 41% of its nett strategy income successful 2024. However, the accelerated enlargement of the AI marketplace mostly offset that slowdown by driving its non-Chinese customers to ramp up their orders of caller EUV systems.

ASML is presently making the modulation from its older "low-NA" EUV systems (which outgo astir $200 million) to its newest "high-NA" EUV systems (which outgo implicit $400 million). TSMC presently uses ASML's low-NA EUV systems to nutrient its smallest 2nm chips, but it volition request to usage high-NA EUV systems to mass-produce adjacent tinier and denser chips. Those sweeping upgrades should importantly boost its revenues and margins implicit the adjacent fewer years.

In 2023, ASML's income accrued by 30%, its gross borderline expanded, and its net per stock (EPS) roseate by 41%. That maturation was driven by the accelerated enlargement of the high-performance computing (HPC), cloud, information center, and AI markets.