ASML has crossed our USD 1,750 target. Time to take profits, but not walk away entirely.

• Last week, ASML shares reached an all-time high of USD 1,903, surpassing our USD 1,750 target. The stock has gained 74% year-to-date, suggesting that much of the medium-term growth outlook is now reflected in the share price.

• Two new developments since our May update reinforce the long-term case. First, Terafab, Elon Musk’s USD 55 billion chip fabrication project in Texas, positions ASML at the center of a potential major new customer relationship. Given the project's early stage of development, any future demand is unlikely to be reflected in current earnings forecasts. 

• Next, ASML signed an MoU with Tata Electronics in May to supply lithography tools for India's first 300mm semiconductor fab. Although this partnership is not expected to be a significant revenue contributor, it positions ASML as a key supplier in India's emerging semiconductor industry. 

• TSMC’s eventual adoption of High-NA EUV, which we flagged as an unpriced catalyst in May, remains a structural driver ahead. When TSMC commits, the implications for ASML’s order book and average selling prices are material as High-NA machines carry roughly double the price tag of existing EUV systems.

• Investors with a full position should consider taking meaningful profits following the stock’s strong performance. For those who remain convicted on the long-term thesis, maintaining partial exposure is reasonable. For new investors, we would caution against chasing current levels as the risk-reward balance appears less compelling after the recent rally.

Our USD 1,750 target has been reached, and the journey here has been exceptional

When we initiated coverage on ASML (NASDAQ: ASML) in November 2024, the shares were trading well below USD 1,000. The stock had sold off sharply following a string of disappointing earnings results and guidance cuts, leaving investor sentiment deeply bruised. 

Our view at the time was that the market was overreacting to near-term cyclical concerns and overlooking the company's enduring competitive strengths: its monopoly in EUV lithography, an expanding installed base that generates recurring high-margin service revenue, and the forthcoming ramp-up of High-NA EUV systems, which would further extend its technological lead. 

That view held through a series of tests. Tariff concerns in early 2025 triggered a brief but sharp sell-off across semiconductor stocks, yet ASML recovered quickly and continued to execute on its long-term growth strategy. That resilience has since been rewarded. 

Last week, the stock reached a record high of USD 1,903, surpassing our USD 1,750 target price (Figure 1). With the target achieved and the shares now reflecting much of the upside envisioned in our original investment thesis, it is an appropriate time to reassess the position.

Figure 1: ASML shares have risen 74% year-to-date

New developments since our last update have strengthened the long-term investment case

Since our May article, two meaningful developments have emerged.

The first, and arguably more significant development is Terafab. At ASML's annual Technology Conference last week, Elon Musk participated virtually to discuss Terafab, a proposed USD 55 billion semiconductor fabrication facility in Texas. The project, a joint venture between SpaceX and Tesla, is intended to manufacture advanced chips for AI, robotics, and space applications. 

ASML’s CEO Christophe Fouquet described the initiative as a "serious development" and confirmed that discussions with Musk are ongoing. Given ASML's exclusive position as the sole commercial supplier of EUV lithography systems, any leading-edge fabrication facility of Terafab's scale would almost certainly require a substantial number of ASML machines. 

Importantly, Terafab remains in its early stages of development, and any potential contribution to ASML's earnings is unlikely to be reflected in current estimates. While there are still considerable execution risk and uncertainty around the project's eventual scale, Terafab represents a potentially meaningful source of future demand that has yet to be fully priced in.

The second, quieter signal came earlier. Back in May, ASML signed a memorandum of understanding with Tata Electronics to supply its suite of lithography tools for India’s first 300mm semiconductor fab in Dholera, Gujarat. Built in partnership with Taiwan's PSMC and backed by a USD 11 billion investment, the fab is designed to produce analog and logic chips across 28nm to 110nm process nodes, for a variety of applications such as automotive, mobile devices, and AI. With a planned monthly capacity of 50,000 wafers, the facility is expected to commence production in late 2026, with volumes ramping through 2027 and 2028.

While the technologies involved in this project are less advanced than the leading-edge nodes that typically attract investor attention, the significance lies elsewhere. India is seeking to establish a domestic semiconductor manufacturing ecosystem, and ASML is positioning itself as a key supplier from the outset. 

Although India is unlikely to contribute meaningfully to revenue in the near term, this partnership reinforces ASML's strategy of securing a role in every major semiconductor manufacturing expansion globally. Establishing these relationships early increases the likelihood that ASML remains deeply embedded in future capacity additions, further entrenching the competitive advantages that underpin its dominant market position.

Finally, TSMC’s High-NA adoption, which we flagged in May as a notable unpriced catalyst, remains a question of timing, not direction. As chip designs grow more complex and the limits of Low-NA EUV approach, the economics of adopting High-NA tools only improve. When TSMC moves, the implications for ASML’s order book are likely to be significant as High-NA machines carry roughly double the price tag of existing EUV systems.

These are the reasons not to exit entirely. 

Take profits now and wait for a more attractive entry point

As of 12 June 2026, ASML trades at approximately 34.7X 2028 estimated earnings, above our assessed fair multiple of 32X. At these valuations, maintaining a full position becomes increasingly difficult to justify. 

The premium valuation reflects two forces working in tandem: the successful execution of the fundamental investment thesis and a sector-wide re-rating driven by enthusiasm surrounding AI and semiconductor demand. Earnings growth can justify higher share prices, but when it is amplified by multiple expansion, the risk of overpaying increases and valuation discipline becomes critical.

For investors holding a full position, valuation alone provides a compelling reason to trim exposure. This is not a departure from the original thesis. Rather, it is the thesis applied consistently. We buy when the market offers a meaningful discount to intrinsic value and reduce exposure when that discount disappears.

For long-term investors who remain highly convicted—those who view Terafab, TSMC's eventual adoption of High-NA EUV, and ASML's strengthening technological moat as reasons to stay invested—maintaining a partial position remains entirely reasonable. The long-term investment case is intact. What has changed is simply the price being paid for that future growth.

For investors not yet invested in ASML (NASDAQ: ASML), we would avoid chasing the stock at current levels. The upcoming second quarter earnings release in July, or any broader market driven pullback, may provide a more attractive opportunity to establish a position at a valuation that offers a better balance of risk and reward.

All in all, the core thesis remains unchanged. ASML's EUV monopoly is intact, its technology roadmap remains on track, and the link between AI infrastructure spending and future demand for advanced lithography systems has never been clearer. We remain positive on the long-term outlook of this company. Our caution reflects valuation, not fundamentals. When the stock once again offers a meaningful discount to fair value, we will revisit our recommendation. 

For now, investors who have benefited from the rally should consider taking profits and wait for a more attractive entry point. 

Table 1: ASML’s earnings projections

Figure 2: Share prices are driven by earnings in the long term

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds a position in ASML.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.