Europe's most valuable company is printing all-time highs while trading at a discount to US semiconductor peers, creating a paradox investors are scrambling to understand.
ASML, the Dutch company that makes the machines that make the chips that power everything from AI data centers to your phone, closed near $1,749 on June 8. That’s an all-time high. It also makes ASML Europe’s most valuable company, with a market capitalization in the range of $650-685 billion.
The numbers behind the paradox
ASML’s Q1 2026 results were, by any reasonable measure, excellent. Sales came in at €8.8 billion, with net income of €2.8 billion. For context, that’s a net margin above 30%.
Management followed up by raising full-year 2026 revenue guidance to €36-40 billion, with targeted gross margins of 51-53%.
Wall Street responded accordingly. JPMorgan raised its price target to $2,200, while Bank of America set its target at €1,921. Multiple analyst upgrades hit in early June.
Yet ASML trades at a normalized P/E ratio of around 58x.
Why ASML is the most important tech company most people haven’t heard of
ASML makes extreme ultraviolet (EUV) lithography systems that use light with wavelengths shorter than what the human eye can see to etch impossibly tiny circuits onto silicon wafers. Without ASML’s machines, the most advanced chips from TSMC, Samsung, and Intel simply cannot be manufactured.
There is no alternative supplier. ASML is the only company on the planet that can build these systems at scale. Each EUV machine costs north of $150 million, weighs roughly 180 tons, and requires multiple planes to ship.
What this means for investors
First, ASML trades primarily on Euronext Amsterdam, not on a US exchange. ASML does have a US listing, but the European domicile creates friction that shows up in the multiple.
Second, there’s the geopolitical dimension. The Dutch government has imposed restrictions on shipping advanced lithography equipment to China, which removes a significant potential market from ASML’s addressable opportunity.
Third, ASML’s business is inherently lumpy. EUV systems take months to build and deliver. Revenue can swing meaningfully quarter to quarter based on delivery timing. The raised guidance to €36-40 billion for 2026, with that €4 billion range, illustrates the point.
JPMorgan’s $2,200 price target implies roughly 26% upside from current levels. If ASML delivers on the upper end of its revenue guidance and maintains those 51-53% gross margins, the current 58x P/E ratio could compress further even as the stock moves higher, simply because earnings would be growing faster than the share price.
