ASML Holding NV’s ascent to fresh record highs has been a highlight for European markets, yet it’s done little to improve what is the stock’s cheapest relative valuation in years.

While the Dutch company’s shares are up 64% in 2026, the gain has lagged that of the broader US semiconductor sector, which has been lifted by soaring demand for artificial intelligence tools. It’s also behind peers like Applied Materials Inc. and key customers like Samsung Electronics Co. 

Although ASML is indirectly benefiting from tailwinds such as surging memory chip prices, investors are questioning the company’s reluctance to raise prices, the pace of adoption of its next-generation devices and how quickly it can ramp up supply. Its forward price-to-earnings ratio relative to major peers is at the lowest in more than a decade.

There are “a lot of concerns that even if the market demand is going to be very strong, it won’t be able to monetize that demand,” Bernstein analyst David Dai said in an interview. For now, hedge fund investors often go short on ASML to fund purchases of other semiconductor stocks, he said.

ASML declined to comment on its share price.

As the sole supplier of extreme ultraviolet lithography machines used to print the intricate patterns required to manufacture advanced semiconductor chips, ASML would appear to be the quintessential “pick-and-shovel” play on the AI boom.

But while surging demand has sent chip prices soaring, ASML Chief Executive Officer Christophe Fouquet said in April the firm won’t raise the prices of its machines — which can cost around €350 million — just because demand is strong. Increases are unlikely for now, according to Barclays Plc analysts.

Another potential setback is the delayed adoption of ASML’s most advanced tools. Taiwan Semiconductor Manufacturing Co. said it will hold off on deploying these machines for chip production through 2029.

But there is no guarantee that adoption will come right after 2029, said Ken Hui, a director at Bakewell Alpha Fund. As the Taiwanese firm improves productivity of its existing tools, it may not need high-NA tools even for its A10 chips that are expected to come around 2030, he said.

Ultimately, investors worry that ASML is getting a smaller share of overall spending by chipmakers, given the industry’s focus on processes outside of lithography — such as deposition, etching and advanced packaging.

There are also questions as to whether ASML can boost its capacity fast enough to capture increases in demand. 

Still, that concern has eased lately, after a slew of analysts said ASML is ramping up production faster than previously expected. Bank of America Corp. earlier this month raised ASML’s price target to the highest among all brokers, forecasting production will reach 90 EUV tools a year by the end of 2027. For comparison, it sold 48 last year. 

On a forward price-to-earnings basis, ASML is about 25% more expensive than Applied Materials, a premium that’s near the lowest since 2014. It’s trading on par versus Lam Research, not seen since 2012. A similar trend holds when comparing ASML against Japan’s Tokyo Electron Ltd.

This low relative valuation may appeal to some long-term investors. The “market should appreciate ASML further,” said John Lamb, equity investment director at Capital Group, the second-biggest shareholder in the Dutch company.

ASML has been at “a slight disadvantage” when much of the momentum trade over the past months happened to US and Asian semiconductor firms, Lamb said. “There might be a degree to which ASML needs to ramp up its order book, and that just takes time.”

With assistance from Andre Janse van Vuuren.

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