ASML (ENXTAM:ASML): Assessing Valuation After Strong Share Price Gains

ASML Holding (ENXTAM:ASML) shares have delivered strong returns over the past year, gaining 40%. Investors have watched the semiconductor equipment giant's performance closely, given ongoing demand shifts in the industry and its steady fundamentals.

See our latest analysis for ASML Holding.

ASML Holding’s share price has climbed an impressive 31.5% in 2024, with momentum accelerating in recent months as optimism grows around semiconductor demand and the company’s unique market position. Its long-term performance stands out too, with a 3-year total shareholder return nearing 94% and a 5-year total return close to 200%, underscoring robust growth potential and continued investor confidence.

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But with ASML’s share price near record highs and much of its future growth already reflected in its valuation, investors face a critical question: is there still room for upside or is the market fully pricing in its prospects?

Most Popular Narrative: 9% Undervalued

According to Investingwilly’s narrative, the fair value for ASML is €1,000, which stands above the last close price of €907.4. This gap highlights the belief that the market has not fully recognized the company’s true earnings power and growth trajectory. Let’s take a look at what’s driving this perspective.

ASML is the only company in the world producing EUV lithography tools. These machines are essential for making the world’s most powerful semiconductors. This gives ASML a near monopoly in a fast-growing market driven by AI, 5G, and high-performance computing.

Read the complete narrative.

Want to unpack what’s fueling this high price target? The narrative hinges on breakthrough technology access, powerful recurring revenues, and projections that hint at a scale few rivals can match. If you’re curious about which future metrics and cash flows set ASML apart, the full narrative walks through the assumptions powering this compelling upside story.

Result: Fair Value of €1,000 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain, including macroeconomic pressures and new export restrictions to China. Both factors could hinder ASML’s near-term growth trajectory.

Find out about the key risks to this ASML Holding narrative.

Another View: A Different Take on Value

Not everyone shares the optimism found in user narratives. According to our DCF model, ASML is actually trading above its estimated fair value of €645.7 per share. This suggests the market may be overly enthusiastic about the company’s future cash flows. Does this highlight a risk, or could the market be on to something others are missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ASML Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ASML Holding Narrative

If you’d like to challenge these viewpoints or prefer to analyze the numbers yourself, you can easily craft your own narrative in just a few minutes. Do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding ASML Holding.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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