Ian King
Chief Strategist, Strategic Fortunes
ASML Has Entered Buy Territory, But Only For Patient Investors
Written by Gabriel Osorio-Mazilli. Published 8/21/2025.
Key Points
- A new valuation gap in ASML stock means investors have a new reason to take advantage of this company's upside potential.
- Driven by fear and not fundamentals, ASML stock has a big upside gap that needs to be filled.
- Holding a near-monopoly position in the industry, ASML should be part of every AI portfolio.
A few companies in the technology sector effectively hold near-monopolies, and investors who recognize their power can position their portfolios for outsized gains. Those who connect the dots in this artificial intelligence gold rush will likely end up on the right side of history.
ASML Holding (NASDAQ: ASML) fits this description perfectly. Its shares not only trade at a discount but also benefit from a formidable moat across the semiconductor industry—exposure many investors will want in the coming months.
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That's why revisiting this stock now makes sense. Today's market often chases the latest hype and hyper growth, leaving high-quality names behind for reasons unrelated to fundamentals. Patient investors can take advantage of this disconnect.
Why ASML Belongs in an AI Portfolio
ASML holds a near-monopoly in extreme ultraviolet (EUV) lithography equipment, which is essential for manufacturing chips at five nanometers and below. This cutting-edge lithography makes modern semiconductors—and industry leaders like NVIDIA Co. (NASDAQ: NVIDIA) and Intel Corp. (NASDAQ: INTC)—possible.
Despite its pivotal role, ASML remains overlooked, partly due to its direct exposure to China. As a result, the stock trades well below levels justified by its fundamentals—creating a compelling buying opportunity for those willing to look past sentiment-driven fear.
Fear Has Pushed ASML to a Historical Discount
ASML's shares currently trade at just 76% of their 52-week high. Part of this stems from its European base and significant business in China, a region the market has indiscriminately punished over the past few years. Emotion—not fundamentals—drives the stock's undervaluation.
Today, ASML's forward price-to-earnings (P/E) ratio sits at 27.8×, well below its historical average of 40.0×. That gap represents potential upside if sentiment shifts.
Crucially, the catalyst won't come from ASML's operations—they remain best in class—but from a broader improvement in market sentiment toward anything exposed to China. We saw similar patterns in Chinese stocks during 2022 and 2025, when indiscriminate selling gave way to institutional buying, restoring trust among retail investors.
Investors are still early to the ASML story. Few major institutions publicly discuss it, despite its critical role in chipmaking. However, a look at another valuation metric—price-to-book (P/B)—reveals further insight. With a P/B of 14.6×, ASML trades at a premium to the computer sector's average of 9.1×. This divergence—discounted P/E alongside a premium P/B—often precedes a major move in the stock, suggesting early investors could be rewarded.
If investors can tolerate the volatility, China-related criticism, and holding a name that many have discarded, they may reap outsized returns by adding ASML to their portfolios and patiently waiting for sentiment to turn.
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