TL;DR If you want to invest in ASML, but you are cautious about the entry price, my advice is to set a price alert on your brokerage app. I'm setting one right now at a 10% price drop, and when that alert hits I might open a small position, I’m also setting another alert at a 20% price drop and if that alert hits I will open a larger position. 

Quick analysis of ASML

ASML is a company that specializes in the manufacturing of photolithography machines, Extreme Ultraviolet (EUV) systems critical for producing our modern semiconductor chips. The company holds a near-monopoly on EUV technology and is the main provider for the chip manufacturers like $Intel(INTC)$  $Taiwan Semiconductor Manufacturing(TSM)$  and Samsung.

The main benefit of this technology is its ability to pack more processing power into smaller chips. Like the latest Blackwell chip die by $NVIDIA(NVDA)$   coming in at an impressive 750mm, which is 20% larger than the AD102, but 28.5% more cores, even beating the RTX 4090 with 33% more cores and 30% better performance.

With leading tech companies seeming to go for more power in smaller packages, EUV systems seem to be the go-to manufacturing method, and with ASML being the only manufacturer and selling repair and maintenance services, ASML definitely seems like a savvy long term investment.

ASML is a high-quality stock with significant long-term potential. Its technological moat (product monopoly) and exposure to AI and chipmaker trends make it a good backbone for tech-heavy portfolios.

But in the short term it poses a significant risk, and the market understands that, which explains the dramatic drop in its share price in the past year. Trading at such a high PE, any earnings miss will cause the stock to become volatile. 

Add on top of that the Geopolitical risk, tensions between US and China especially with Trump tariffs on China, could affect ASML with 15% of its sales coming from China. Add on top of that ASML is based in the Netherlands, and with Trump’s comments about non-domestic chipmakers

https://www.reuters.com/technology/responding-trump-tariff-threat-taiwan-says-chip-business-is-win-win-2025-01-28/

, it seems ASML can be hit with two layers of tariffs. Short term investors need to account for this added risk that could slow ASML’s explosive growth.

ASML shows volatile growth of its Free Cash Flow over the past 5 years

2021: €11.766 billion, a 181% increase from 2020.

2022: €7.591 billion, a 35.48% decrease from 2021.

2023: €3.558 billion, a 53.12% decrease from 2022.

This could be due to the uptick in ASML product demand in 2021, but the global semiconductor market going through a lot of changes and setbacks from 2022 onwards. 

Keep in mind today, the market is more than willing to pay future prices on tech stocks, fully believing the company can grow at the rapid rates it has done in the past. We must ponder why Mr Market is comfortable buying NVDA at future prices, but not ASML.

Technical Analysis:

RSI; The 14-day Relative Strength Index (RSI) for ASML is currently at 45.51, with the sector average being 42.67 suggesting that even with the price dip, ASML is trading at a premium to the others, perhaps waiting for it to get closer to an RSI of 30 might be a better buying opportunity, amid all the risks as of late to the industry.

200 EMA; the stock is however trading under the 200 day moving average, it has broken under the long term support level, and its 50 day moving average is currently under the 200 day EMA, which could signal a death cross. This is quite the bearish trend.

If ASML’s revenue continues to grow at an average of 12% for the next 10 years, then a DCF calculation gives it an intrinsic value of €520.20, which means the stock needs to drop about 24% before a potential entry opportunity appears.

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