ASML stock is up 54% YTD. It has the monopoly on the EUV machines for making seminconductor chips.

[music] >> Hi everyone. This is Dan with another episode of my ASML videos. ASML has been up 54% year-to-date and it is now August 11th, 2026. ASML has a monopoly on the EUV or extreme ultraviolet equipment for making computer chips. It's a very strong company fundamentally. For full disclosure, I want to tell you that I do own ASML shares. I make these videos not to get viewership and get payment from YouTube. This video is just a byproduct of my research for my own investment. For example, you will find on my YouTube channel that I posted on January 25th, 2023 that I bought ASML shares. I still own those shares and actually I'm sitting at 165% gain already for those shares. And then as of yesterday, August 10th, I posted that I bought more ASML shares. In fact, if you look at the video that I published on February 3rd, 2023 on ASML, in that video I predicted that ASML was going to be a $750 a share by February 3rd, 2024. That's a year from the day when I published that video and when I published the video, the share price was $679. And sure enough, ASML exceeded my prediction. Also, based on my calculation in 2023, I was looking at $916 a share by February 2026. And now it's August 2026 and ASML is at $1,799 a share. I was definitely correct in buying ASML in 1923. If I made a mistake, it was that my calculation was too conservative. That's why I have updated my analysis and I like to tell you what I found. If you think this is interesting, please click the like, subscribe and notification button so that you can encourage me to make more videos like this in the future. Let's continue. We have a lot of things to cover. Let's look at how the stock price has been trending for the last year. ASML is represented by this red and yellow line, the candlestick chart. And as you can see, it's been up 149%. And this red line here is the SMH ETF. That's ETF for the semiconductor industry, and it's up 94%. Pretty good, but not as good as ASML. This blue line here is the triple Q, representing Nasdaq 100, up about 21%, and uh pink line here is SPY, representing the S&P 500, also up only about 21%. So, definitely ASML has been outperforming the broad market and outperforming the semiconductor stocks. For the last 3 months, again, ASML is up 14%, outperforming SPY, triple Q, and SMH. ASML is the world's leading supplier of photolithography systems used in manufacture of advanced semiconductors. They are the only commercial producer of EUV lithography machines, which is needed to produce the most advanced microchips. There are certain risks related to the company, especially related to export controls affecting shipment to China, and I'll talk a little bit about that later on. The most important thing is that they dominate the semiconductor lithography market with 100% share in the EUV and 80 more than 80% share in the DUV segment. DUV is a older technology. EUV is the most advanced technology. They recently announced their second quarter earnings, and the reaction from the market was quite positive. If you look at graphically, their 12-months trailing EPS numbers, you can see that at least for the 7-8 years, their EPS has been growing very steadily. This is a summary of the analyst opinions about a second quarter earnings. They say ASML's second quarter beat was substantial. And the AI demand is accelerating the orders. The customers and the major customers, especially TSMC, Taiwan Semiconductor, Samsung, SK Hynix, and Micron are fast-tracking capacity expansion. And guidance hike by the management was stronger than expected. So, it's pretty positive all around. I pulled these charts from the Better Investing SSG software. You can see that the ASML sales, represented by the black line, is growing steadily and compare favorably with the industry average and with their major competitors. And the EPS has been growing quite steadily as well. This is the most impressive chart, but debt-to-capital ratio, ASML's debt is the lowest compared to the competitors and compared to industry standard. Return on equity, better than the industry average. Since January of 2026, some major semiconductor fab plant investments have been announced. For example, Micron announced $200 of investment to be executed in the next few years. Taiwan Semiconductor, $100, and Samsung, $17. If you look at the annual revenues of ASML in 2025, it's about $37. That means these CapEx expenses are quite substantial compared to the annual revenues of ASML. Of course, ASML will not be the only supplier to these semiconductor manufacturers, but they will definitely have a substantial chunk of the sales related to these CapEx spendings. Currently, ASML has 1 year of backlogged orders, so that's pretty good. Let's look at the China chip ban, which represent a risk to ASML. Based on the US ban on ASML equipment export to China, ASML is prohibited from selling the most advanced EUV machines to China. And even the less advanced DUV machines are severely restricted. They can only sell the older version of the DUV machines to China. Considering how China caught up with the solar panel industry and overtaken a lot of other light industries as well as their recent advancement in the EV manufacturing business, we need to be mindful of what China will be doing as far as developing their own lithography machines. Here's a summary of the latest progress of lithography machines developed in China. Currently, they have mature machines, DUV machines, for producing 65 nanometer chips. The most advanced microchips produced by the ASML machine is 2 nanometers. So, in comparison, that's quite a difference. At least China is quite a few years behind ASML. And then the more advanced DUV machine, China currently has low volume production for 28 nanometer chips. And very, very limited production of 7 nanometer chips when they basically make multiple passes on the same substrate, and that usually result in a very low yield rate. That's definitely not an optimal way of producing microchips. Even at 28 nanometers, that's still 3 to 4 years behind the ASML [clears throat] machines. China is currently developing or trying to develop EUV machines, but that's only in experimental stage. And that's why I would say ASML is definitely at least 3 to 4 years ahead of China. If you look at the manufacturers that used ASML machines, they are Taiwan Semiconductor, Samsung, Intel. These are the who's who in the semiconductor industry. The actual products using chips produced with the ASML machines, for example, iPhone 15, 16 Pro, Samsung leading flagship cell phones, MacBook, Nvidia Blackwell chips, AMD MI300, and Intel Core Ultra Series 3 CPU, and then Tesla Dojo the supercomputer built by Tesla, and then also cloud computing supported by Amazon, Meta, Microsoft. These are the cutting-edge consumer electronic products or the most powerful supercomputer and cloud services in the world. They are all built with the help of ASML equipment. If you look at their dividends and stock buybacks history, their dividend yield is about 0.5 to 0.44%. They have been consistently doing stock buybacks. And for today until the end of 2028, they have announced stock buyback plans that amount to about 2% of their market capitalization. Let's look at how much ASML stock is worth. First, I look at the leading semiconductor makers including ASML, and the data here are from Yahoo Finance. And I list out the market cap, trailing P/E ratio, forward P/E ratio, and PEG ratio. ASML's here. You can see the average trailing P/E ratio is 54, and the forward P/E ratio is 23 according to Yahoo. PEG ratio, I didn't do the average, but according to Yahoo, ASML PEG ratio is 2.09. Based on my own calculation now, it's about 1.5 the PEG ratio for ASML. Using these numbers as a reference, I make the assumption that the ASML P/E ratio will be 47 because currently their P/E ratio is 55. At least for the next couple years, I think assuming a 47 P/E ratio is reasonable. And the annual growth, I assume that to be 35%. That's because Yahoo gives a earning growth ratio of 35.22 for the next year, and Finviz gives a estimate of 37.6% for the next 5 years. Their growth in the last 3 to 5 years is 23.4%. 35% is a jump, but I think it's reasonable at least for the next couple years. And they have 385 million shares outstanding based on their current P ratio stock price and their 12-month today earnings and these assumptions I can extrapolate the stock price for the next few years. For example, at the end of 2026, I estimate a stock price of 1953 and of 2027 the stock price of 2637. And with these numbers, I forecast a stock price of $2600 a share by the end of 2027. As long as we're on this page, let's look at the PEG ratio. As you know, the PEG ratio is defined by dividing the P ratio by the EPS growth rate. And the P ratio is 55.45 based on the most recent EPS numbers and stock price, today's stock price. If you use the EPS growth rate for the past 3 to 5 years, which is 23.4%, then the PEG ratio will become 2.4, which is a bit on the high side. However, if you use the EPS growth rate for the next 5 years as estimated by Finviz, which is 37.6% and even Yahoo estimates the growth rate of 35.22% next year for the next year. And then if you use the 37.6% as the growth rate, then the PEG ratio will be 1.5, which is a reasonably small number. I'm pretty confident that ASML will achieve a growth rate of 37.6% or higher for the next couple years because of AI boom and because of the backlog of orders they have on hand. And that's why I believe ASML is a good investment choice. Let's look at their revenue composition to see how much they're dependent on things that are very competitive and how much they're dependent on things that are not so competitive. The most competitive things they produce are the EUV machines. If you look at the 2025 annual report, they derive 75% of their revenues from selling EUV and DUV machines and a small portion from selling the metrology and inspection machines. And for service and fuel options, the service revenue is only 25%, metrology inspection and small sub service system is less than 2.5%. And within this chunk, within the 75% 48% almost half of it is from the EUV machines. And the EUV machines revenue for 2025 already increased from the 2024 revenues by 38%. That means your competitive position in the EUV market is really getting stronger and stronger, and that's a good news. Let's look at what the analysts have been saying about ASML. This is from Finviz. And you can see since September of last year, we have a bunch of upgrades. And there's only one downgrade by New Street, and they they downgraded ASML from buy to neutral. And everybody else upgraded ASML. For example, Barclay upgraded them on January 29th, 2026. They upgraded them from equal weight to overweight. UBS upgraded them from neutral to buy, and so on and so forth. So, definitely very positive. And then from TipRanks, they gave them a strong buy rating, and the high target is $2,860 a share, and current share price is $1,784 a share. So, that's quite a jump compared to the current price. Even the average is $2,470, still substantially higher than today's price. And that's their TipRanks assessment of the price a year from now. And the low target is $2,100, still better than today. So, what are my strategies? First of all, I bought ASML back in actually 2020, and I still hold those shares. And also, I bought more shares on January 25, 2023. I mentioned that earlier. I'm still holding those shares. In the meantime, I've been swing trading additional shares of ASML for good profits. Generally speaking, I buy more shares when it's bouncing from a key support level or when positive news develop. Just in the last two three days, ASML started to rebound and that's why I bought more shares. And I usually sell shares when it drops below a key resistance level or when adverse news develops. I will notify my subscribers through the post section in my YouTube channel when I buy or sell ASML shares or when major news develops. Like to remind you to click the like, subscribe and notification button. Thank you for listening all the way to here. I like to remind you that I'm not a financial advisor. I share my stock trading strategies and analysis for educational and entertainment purposes only. If you want to buy or sell stocks, you should make your own decisions and you should definitely consult with your financial advisors before you do so. This wraps up my video for now. I will chat with you again in the next few days. In the meanwhile, I'd like to wish you the very best of luck with your financial investments.