ASML stock is in record-high territory after its recent breakout and a Wall Street analyst says the semiconductor equipment leader deserves its premium valuation.
Raymond James analyst Srini Pajjuri reiterated his strong buy rating on ASML stock late Monday. He also raised his price target to 1,300 from 1,100.
On the stock market today, ASML stock fell 1.6% to close at 1,059.97. On Monday, it notched an all-time high of 1,087.79.
Pajjuri also raised his price targets on chip-gear stocks Applied Materials, KLA and Lam Research, all of which he rates as outperform.
"While valuations are near multiyear highs, we continue to see favorable risk/reward and reiterate our positive stance on the group heading into Semicon West," Pajjuri said in a client note. He forecast sales growth in 2025 and 2026 driven by a cyclical recovery, generative artificial intelligence demand, geopolitics, and intensifying competition in the foundry space.
ASML Stock Is A Recent Breakout
ASML stock has been hindered lately by concerns about near-term quarterly bookings, he said. That includes delays in securing contracts from key customer Taiwan Semiconductor Manufacturing, better known as TSMC.
"While price negotiations with TSMC appear to be the reason for recent order weakness, we expect any additional delays to be temporary given improving end demand, Gen AI megatrend, and intensifying competition in foundry space," Pajjuri said. "As such, we view any pullback on near-term order weakness as an opportunity."
ASML makes advanced lithography systems for etching tiny circuits onto semiconductors. It is the world's only manufacturer of extreme ultraviolet (EUV) lithography equipment.
ASML stock is on two IBD lists: Leaderboard and Tech Leaders.
On June 12, ASML stock broke out of a 13-week consolidation pattern at a buy point of 1,056.34, according to IBD MarketSurge charts.
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