What Does ASML’s 32.5% Surge Mean for Its True Value in 2025?

Thinking about whether to buy, sell, or just keep holding ASML Holding stock? You are not alone, and with the way this company has been performing lately, there is plenty to weigh. Over the past month alone, ASML's share price has surged by an impressive 32.5%, outpacing both the broader market and many industry peers. Even when you zoom out, the longer-term track record is hard to ignore: a 26.8% jump since the start of the year and a massive 166.5% gain over five years.

This recent strength has not come out of nowhere. The semiconductor sector has seen renewed excitement as big players look to secure cutting-edge chipmaking equipment, and ASML's unique position as a supplier of advanced lithography machines has put it at the center of that attention. With so much momentum, some investors see remarkable growth potential, while others are asking whether the rally has made the stock too expensive.

So, how do the numbers add up in terms of how the market values ASML today? If you are looking for simple answers, the company's current valuation score is 2 out of 6, meaning it is identified as undervalued by only two of the six main valuation checks experts reference. Of course, those numbers are just the starting point.

Let's take a closer look at the most common valuation approaches investors use to assess companies like ASML, before digging into an even more insightful way to decide what this stock is truly worth.

ASML Holding scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: ASML Holding Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the value of a business by projecting its future cash flows and then discounting them back to the present using a required rate of return. For ASML Holding, this approach looks at how much cash the company is expected to generate each year, taking into account both analyst forecasts and longer-term market assumptions.

As of the last twelve months, ASML produced Free Cash Flow of €8.9 Billion. Analyst projections see this number rising steadily, forecasting Free Cash Flow to reach €15.1 Billion by 2029. Beyond analyst estimates, further growth projections are extrapolated and factor in a moderation of expansion over time. All cash flows are shown in Euros to match the company’s reporting currency.

Running these projections through the DCF approach, the model arrives at an estimated intrinsic value of €649.41 per share. However, with the recent rally, ASML shares are currently priced at a premium, trading about 34.7% above this intrinsic value. This suggests the stock is overvalued based on expected future cash generation.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ASML Holding.

Our Discounted Cash Flow (DCF) analysis suggests ASML Holding may be overvalued by 34.7%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: ASML Holding Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is widely regarded as the preferred way to value mature, profitable companies like ASML Holding. This multiple lets investors see how much they are paying for each euro of current earnings, making it especially useful when earnings are consistently positive and growing.

The "right" PE ratio for a company is shaped by expectations for future earnings growth, as well as the risks that might cause those earnings to fall short. Higher growth rates and lower risks generally justify a higher PE, while slow-growing or riskier companies should command lower multiples.

ASML currently trades at a PE ratio of 36x. This is a bit lower than the average for its closest peers at 44.3x and also sits below the broader semiconductor industry average of 38.1x. At first glance, this might suggest the stock is attractively valued relative to its peers and sector.

However, Simply Wall St takes the traditional PE comparison a step further with the proprietary Fair Ratio metric. The Fair Ratio for ASML is 46.1x, which is tailored to ASML’s unique profile, factoring in expected earnings growth, high profit margin, industry dynamics and its massive market cap, alongside risk factors. This approach delivers a much clearer sense of what ASML "should" be worth, beyond just peer averages.

Comparing ASML's actual PE ratio (36x) to its Fair Ratio (46.1x), the stock comes across as undervalued when accounting for the company’s strengths and outlook.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ASML Holding Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let’s introduce you to Narratives, a new, more powerful tool for investment analysis. A Narrative is your personal perspective on a company, combining what you believe about its business, growth, and sector into a story that connects real-world events, assumptions about future revenue, earnings, and margins, and ultimately the fair value you assign the stock.

Unlike static ratios or one-size-fits-all metrics, Narratives link the company's story directly to a tailored financial forecast. This helps you understand why a stock could be worth more or less based on changes in its business or the market. On Simply Wall St’s Community page, millions of investors are already using Narratives to compare their own fair value against the current price, making buy, hold, or sell decisions based on what they believe will matter most for ASML.

Narratives are updated automatically as new news and quarterly results come in, so they always reflect the latest information. For example, some ASML Narratives today estimate a fair value as high as €1,000, reflecting confidence in sustained growth and industry dominance, while others set it closer to €865, factoring in risks like export restrictions or market competition. This proves there are many valid ways to see the same stock story.

For ASML Holding, we will make it straightforward for you with previews of two leading ASML Holding Narratives:

🐂 ASML Holding Bull Case

Fair Value: €1,000.00

Undervalued by: -12.5%

Forecast Revenue Growth: 17.26%

• ASML is the world’s only supplier of EUV lithography machines, making it a near-monopoly in advanced chipmaking and placing it in a key role within the semiconductor industry’s future.
• The company posted strong Q2 results and maintains robust recurring revenues from service contracts, along with a high order backlog and strong shareholder returns.
• Despite short-term caution around growth and global trade risks, this narrative interprets recent share price weakness as a long-term buying opportunity, given secular tech demand and ASML’s strategic position.

🐻 ASML Holding Bear Case

Fair Value: €864.91

Overvalued by: 1.1%

Forecast Revenue Growth: 9.65%

• ASML dominates the semiconductor supply chain due to its advanced technology, but it faces increasing risks from export restrictions and efforts by countries like China to achieve self-sufficiency.
• Despite robust order books and a diversified global customer base, reduced demand from China due to geopolitical changes is a significant challenge, partially offset by growth initiatives in the US and Europe.
• This narrative values ASML below its current share price and cautions that, while the company’s leadership is well-defended, investors should consider shifting global trade dynamics and competitive pressures.

Do you think there's more to the story for ASML Holding? Create your own Narrative to let the Community know!

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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