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ASML Stock Trades at a Discount: Should You Buy, Sell or Hold?
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Key Takeaways
ASML trades at a P/E discount versus the tech sector and key semiconductor peers.
Stock declined, but Q2 sales and EPS rose 23.2% and 47.1%, respectively, and beat analyst estimates.
ASML cut its Q3 outlook and warned of uncertain 2026 growth amid tariffs and customer hesitation.
ASML Holding N.V. (ASML - Free Report) is currently trading at a discounted valuation, making it an intriguing stock for investors to consider when deciding whether to buy, hold or sell. With a forward 12-month price-to-earnings (P/E) ratio of 26.14, ASML is trading at a lower multiple than the Zacks Computer and Technology sector’s average of 28.19.
Image Source: Zacks Investment Research
It also trades at a lower valuation compared to major semiconductor companies, such as Broadcom (AVGO - Free Report) , NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . Currently, Broadcom, NVIDIA and Advanced Micro Devices have P/E multiples of 38.58, 36 and 24.47, respectively.
With ASML’s discounted valuation, investors might be thinking of buying the stock. However, considering the uncertainty about the 2026 growth outlook, the lucrative valuations could be a value trap for investors.
ASML Stock Plunges Despite Strong Q2 Results
ASML Holding shares have dropped 9.6% since the company reported its second-quarter 2025 results on July 16. ASML net sales grew 23.2% year over year to €7.69 billion, while EPS surged 47.1% to €5.90.
Converted to the U.S. dollar, ASML Holding’s second-quarter revenues and EPS were $8.7 billion and $6.70, respectively, both surpassing analysts’ expectations. The top line beat the Zacks Consensus Estimate by 1.8%, and the bottom line surpassed it by 12.8%.
Despite strong quarterly results, the market reaction was negative, largely because of weaker-than-expected third-quarter guidance and management’s commentary about the uncertain growth outlook for 2026.
Shares of ASML Holding have underperformed the broader tech sector this year so far. Year to date, the stock has gained 7.1%, significantly lower than the sector’s growth of 13.7%. It has also underperformed major semiconductor players, including Broadcom, NVIDIA and Advanced Micro Devices, which have risen 32.1%, 34.4% and 47%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
ASML Turns Cautious About 2026 Outlook
During the second-quarter earnings call, management backed away from earlier confidence about growth in 2026. Previously, ASML Holding had expected demand to keep rising, especially with AI fueling more chip production. However, during the latest earnings call, the company said that it “cannot confirm growth in 2026,” pointing to customer hesitation and ongoing market uncertainty.
During the call, ASML Holding acknowledged that ongoing U.S.-China tariff discussions, including the Section 232 tariff review, are negatively impacting customer capital spending timelines. This hesitation may delay orders and revenue recognition in late 2025 and into 2026, casting doubt on near-term growth continuity.
Additionally, ASML Holding issued disappointing guidance for the third quarter. The company expects third-quarter revenues between €7.4 billion and €7.9 billion. As per the Euro/USD currency exchange rate as of July 16, the top-line guidance ranges from $8.6 billion to $9.2 billion, significantly lower than the Zacks Consensus Estimate of $9.81 billion.
ASML expects the third-quarter gross margin in the 50-52% range, depicting a significant decline from 53.7% in the second quarter. This sequential decrease is expected mainly due to margin-dilutive High NA system revenues and fewer upgrade orders.
All these factors have caused near-term uncertainty about ASML Holding’s prospects. The Zacks Consensus Estimate for 2026 earnings has been revised downward by 4.1% over the past 30 days.
Image Source: Zacks Investment Research
Conclusion: Sell ASML Stock for Now
While ASML Holding remains a critical player in semiconductor manufacturing, the near-term setup is unfavorable. The stock’s valuation discount looks less like a buying opportunity and more like a reflection of real risks ahead. With growth momentum slowing, trade headwinds lingering, and management itself raising concerns about growth, investors should avoid investing in ASML stock at current levels.
Additionally, ASML carries a Zacks Rank #4 (Sell), suggesting investors stay away from the stock for now.
Image: Bigstock
ASML Stock Trades at a Discount: Should You Buy, Sell or Hold?
Key Takeaways
ASML Holding N.V. (ASML - Free Report) is currently trading at a discounted valuation, making it an intriguing stock for investors to consider when deciding whether to buy, hold or sell. With a forward 12-month price-to-earnings (P/E) ratio of 26.14, ASML is trading at a lower multiple than the Zacks Computer and Technology sector’s average of 28.19.
Image Source: Zacks Investment Research
It also trades at a lower valuation compared to major semiconductor companies, such as Broadcom (AVGO - Free Report) , NVIDIA (NVDA - Free Report) and Advanced Micro Devices (AMD - Free Report) . Currently, Broadcom, NVIDIA and Advanced Micro Devices have P/E multiples of 38.58, 36 and 24.47, respectively.
With ASML’s discounted valuation, investors might be thinking of buying the stock. However, considering the uncertainty about the 2026 growth outlook, the lucrative valuations could be a value trap for investors.
ASML Stock Plunges Despite Strong Q2 Results
ASML Holding shares have dropped 9.6% since the company reported its second-quarter 2025 results on July 16. ASML net sales grew 23.2% year over year to €7.69 billion, while EPS surged 47.1% to €5.90.
Converted to the U.S. dollar, ASML Holding’s second-quarter revenues and EPS were $8.7 billion and $6.70, respectively, both surpassing analysts’ expectations. The top line beat the Zacks Consensus Estimate by 1.8%, and the bottom line surpassed it by 12.8%.
Despite strong quarterly results, the market reaction was negative, largely because of weaker-than-expected third-quarter guidance and management’s commentary about the uncertain growth outlook for 2026.
Shares of ASML Holding have underperformed the broader tech sector this year so far. Year to date, the stock has gained 7.1%, significantly lower than the sector’s growth of 13.7%. It has also underperformed major semiconductor players, including Broadcom, NVIDIA and Advanced Micro Devices, which have risen 32.1%, 34.4% and 47%, respectively.
YTD Price Return Performance
Image Source: Zacks Investment Research
ASML Turns Cautious About 2026 Outlook
During the second-quarter earnings call, management backed away from earlier confidence about growth in 2026. Previously, ASML Holding had expected demand to keep rising, especially with AI fueling more chip production. However, during the latest earnings call, the company said that it “cannot confirm growth in 2026,” pointing to customer hesitation and ongoing market uncertainty.
During the call, ASML Holding acknowledged that ongoing U.S.-China tariff discussions, including the Section 232 tariff review, are negatively impacting customer capital spending timelines. This hesitation may delay orders and revenue recognition in late 2025 and into 2026, casting doubt on near-term growth continuity.
Additionally, ASML Holding issued disappointing guidance for the third quarter. The company expects third-quarter revenues between €7.4 billion and €7.9 billion. As per the Euro/USD currency exchange rate as of July 16, the top-line guidance ranges from $8.6 billion to $9.2 billion, significantly lower than the Zacks Consensus Estimate of $9.81 billion.
ASML expects the third-quarter gross margin in the 50-52% range, depicting a significant decline from 53.7% in the second quarter. This sequential decrease is expected mainly due to margin-dilutive High NA system revenues and fewer upgrade orders.
All these factors have caused near-term uncertainty about ASML Holding’s prospects. The Zacks Consensus Estimate for 2026 earnings has been revised downward by 4.1% over the past 30 days.
Image Source: Zacks Investment Research
Conclusion: Sell ASML Stock for Now
While ASML Holding remains a critical player in semiconductor manufacturing, the near-term setup is unfavorable. The stock’s valuation discount looks less like a buying opportunity and more like a reflection of real risks ahead. With growth momentum slowing, trade headwinds lingering, and management itself raising concerns about growth, investors should avoid investing in ASML stock at current levels.
Additionally, ASML carries a Zacks Rank #4 (Sell), suggesting investors stay away from the stock for now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.