ASML, the global leader in advanced photolithography systems for semiconductor manufacturing, holds a monopoly-like status in EUV technology. Unlike chip designers or fabs, ASML sells the machines that make AI chips possible.
Its margins rival Big Tech, its cash flow is surging — but at $1,065, is the stock pricing in too much optimism already?
Consolidated Financial Performance (2023 – 2025)
| Key Metric | 2023 | 2024 | TTM (2025) | Trend |
|---|---|---|---|---|
| Revenue ($M) | $29,794 | $30,572 | $35,536 | +19% |
| EBITDA ($M) | $10,626 | $10,827 | $13,488 | +27% |
| Net Income ($M) | $8,475 | $8,190 | $10,432 | +23% |
| EPS (Diluted) | $21.50 | $20.81 | $26.71 | +24% |
| Free Cash Flow | $3,554 | $9,842 | $9,753 | +174% |
- ASML continues its steady climb — not hyper-growth, but high-quality compounder territory.
- FCF has nearly tripled in just two years, confirming strong internal efficiency.
- EPS growth remains robust, despite flat share count — solid shareholder return fundamentals.
Margins: Industrial Tech with Big Tech Profitability
| Margin Type | 2023 | 2024 | TTM (2025) | Commentary |
|---|---|---|---|---|
| Gross Margin (%) | 50.2% | 49.8% | 52.7% | Back above 50% |
| Operating Margin (%) | 32.8% | 31.9% | 34.8% | Strong structural margin |
| Net Margin (%) | 28.4% | 26.8% | 29.4% | Among the best in the sector |
These are margins that rival Apple or Microsoft — but in an ultra-complex industrial business. That speaks volumes about ASML’s pricing power and technical moat.
Cash Flow & Capital Allocation
| Financial Flow | 2023 | 2024 | TTM (2025) | Strategic View |
|---|---|---|---|---|
| Free Cash Flow ($M) | $3,554 | $9,842 | $9,753 | Exploded upward |
| CapEx ($M) | -$2,374 | -$2,253 | -$2,081 | Under control |
| Stock Buybacks ($M) | -$1,081 | -$541 | -$4,791 | Heavily ramped in TTM |
| Dividends Paid ($M) | -$2,539 | -$2,653 | -$2,833 | Stable and increasing |
| Net Cash Flow ($M) | -$285 | +$6,199 | -$147 | Cyclical swings, not alarming |
ASML has entered its cash compounding phase. It maintains strong buybacks and dividends while staying CapEx-efficient — a rare feat in high-tech equipment.
Valuation: Still Too Expensive?
| Valuation Metric | 2023 | 2024 | TTM (2025) | Commentary |
|---|---|---|---|---|
| PE Ratio | 36.5x | 39.9x | 39.9x | Elevated, but quality-backed |
| Price / FCF | 293.7x | 38.0x | 53.3x | ⚠️ Spiked again post-dip |
| Price / Sales | 10.0x | 8.9x | 10.4x | Reasonable in sector context |
- Valuation is not cheap. But quality, dominance, and durability explain the premium.
- The return to high Price/FCF levels post-2023 dip suggests renewed growth optimism — possibly ahead of actual results.
Stock Price Scenarios
| Horizon | Target Price ($) | Scenario | Upside vs $1,065 |
|---|---|---|---|
| Q2 2025 | $980 – $1,000 | Technical pullback / consolidation | -6% to -2% |
| End 2025 | $1,150 – $1,200 | Growth + stable margins | +8% to +13% |
| 2026–2027 | $1,300 – $1,500 | High-NA EUV boom + AI chip cycle | +22% to +41% |
Key Risks to Monitor
| Risk | Impact | Comments |
|---|---|---|
| US–China Tech Sanctions | High | ASML caught in the geopolitical crossfire |
| EUV Order Saturation | Medium | Needs next-gen High-NA adoption for new cycle |
| Customer Concentration | Medium | TSMC, Samsung, Intel = bulk of revenue |
| Semiconductor Downcycle Risk | Normal | Capital spending is cyclical, impacting revenue flow |
Conclusion & Recommendation
| Factor | Evaluation |
|---|---|
| Growth Trajectory | Solid, but no hypergrowth |
| Margins | Exceptional |
| Free Cash Flow | Surging |
| Buybacks & Dividends | Aggressive & consistent |
| Valuation | High, but strategically justified |
| Long-Term Potential | Very strong with High-NA EUV |
Final Verdict: HOLD / Buy on Pullback to $990–$1,000
ASML remains the irreplaceable enabler of advanced chips, with a world-class moat, solid balance sheet, and cash-rich model. At $1,065:
- Worth holding for long-term tech exposure
- Safer entry zone: $990–$1,000
- Big upside possible as AI chip demand accelerates and next-gen tools roll out
Disclaimer :
This content is for informational purposes only and does not constitute investment advice. All investments carry risk, including the loss of capital. Conduct your own research before making any decision.
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