By Adam Clark

ASML Holding has fallen back from recent highs. That's an opportunity to get into the chip-making machinery company at a relatively cheap price, according to analysts at TD Cowen.

ASML's U.S.-listed shares are down 7% in the past month. Enthusiasm about record orders for its lithography tools -- which are vital for making advanced chips -- and heavy investment by Taiwan Semiconductor Manufacturing (TSMC) has been dented by a rotation away from semiconductor stocks exposed to the artificial-intelligence boom.

"Typically, ASML trades at a premium to its US large cap peers; but currently the delta is small given growth forecasts slightly below peers...making the stock set-up very attractive," wrote TD Cowen analyst Krish Sankar in a research note.

Sankar noted that since late 2022, ASML's valuation has declined from a 120% premium against semiconductor equipment peers such as Applied Materials, Lam Research and KLA Corp, to roughly a 20% premium today. The analyst links that to chip manufacturing advancements that make lighter use of ASML's extreme ultraviolet lithography, or EUV, tools.

However, Sankar argued that future generations of both logic chips and memory chips will require more use of ASML's EUV tools.

"The leading-edge foundry/logic thesis is well understood, however we believe the incorporation of EUV layers in customer's DRAM [dynamic random-access memory] roadmaps is underappreciated," Sankar wrote.

As Barron's has written, one question hanging over ASML is adoption of its newest high-numerical aperture EUV machines. TSMC has been reluctant to publicly commit to buying the equipment, suggesting it can extend the life of its existing machines. But Sankar argued that improving reliability of the high-NA EUV machines should convince customers to upgrade.

"We model 60 [lithography] systems in 2026, growing to 68 tools in 2027 as High-NA units double and low-NA shifts to 3800E models (and future 4000F)," Sankar wrote.

Sankar has a Buy rating and 1,500 euros ($1,735) target price on ASML's Amsterdam-listed shares, based on a price-to-earnings multiple of 48 times his forecast for the company's 2027 earnings per share.

ASML stock was down 0.3% at EUR1,165 in trading Thursday. ASML's U. S-listed shares were down 1.4% at $1,347.40 in premarket trading.

Write to Adam Clark at adam.clark@barrons.com

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March 20, 2026 07:29 ET (11:29 GMT)

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