ASML (ASML) has been a longstanding holding in my portfolio, and I view it as a wide-moat investment with dependable long-term cash flows. While the company’s growth follows natural industry cycles, the outlook for the next few years appears especially strong, thanks to sustained AI-driven demand, given ASML’s unique position as the sole supplier of machines used to produce the most advanced semiconductors.
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However, given the slow-burning performance, I have decided to take a Bearish position on the stock, liquidating my entire position and looking to reallocate capital toward higher-growth opportunities that will not need as much time as ASML to bear fruit.
ASML’s Financials Are Resilient, But Lackluster
Investing in a stock for its stable cash flows and dominant market position is classic Buffett-style—buying with the intent to hold for a decade or more, sometimes forever. If Buffett were more tech-focused, I believe ASML would be on his shortlist for precisely those reasons.
That’s also part of why I’ve held the stock. But while ASML has solid fundamentals, my position is only up about 15% since January, compared to some of my other holdings, which have surged 50% or more in just a few months. My position in CoreWeave (CRWV), for example, returned 170% in just three months.
There’s a lesson here: if you’re good at it, trading can generate far higher returns than long-term investing. This isn’t just theory—Buffett himself began as a value trader, delivering 30% annual returns with an average holding period of about a year.
And traders like Stanley Druckenmiller and George Soros made legendary returns with well-timed, shorter-term plays. Just because the mainstream wisdom says “buy and hold” doesn’t mean that’s the best path for everyone, especially not for those aiming to outperform, not just keep pace.
That’s why I’ve decided it’s time to sell ASML. It’s a great company with a strong long-term future, but right now, there are too many higher-alpha opportunities available. Trading above its 50-week moving average with consensus earnings growth of just 13% next year just doesn’t cut it for me. Maybe ASML belongs in a retirement portfolio—but for what I’m trying to achieve, it feels like a drag on performance.
Why ASML Fits Long-Term Investors Only
While my strategy prioritizes high-alpha returns at the cost of increased volatility, ASML could still be one of the strongest holdings for long-term, passive investors. The fundamentals remain solid: the company’s forward revenue growth rate is 10.68%, compared to the sector average of 7.31%, and forward diluted EPS growth stands at 12.7%, outperforming the sector’s 10.37%.
In terms of valuation, ASML trades at a forward P/E of 29, versus a sector median of 24, suggesting it’s fairly valued, not stretched. Technical indicators back this up: the stock is trading just above its 50-week moving average, reflecting bullish sentiment without appearing overheated. Similarly, the 14-week RSI sits at 60—well below the overbought threshold of 70, indicating there’s still room for upside without signaling excessive enthusiasm.
Given these conditions, consensus earnings projections provide a realistic guide for potential returns. Analysts forecast 13% earnings growth in fiscal 2026 and around 22% in 2027. That puts a reasonable expectation for stock price appreciation in the 15–20% range over the next couple of years, strong, steady returns for a high-quality, fairly valued business.
That said, for my own goals—targeting 30%+ annual returns—that isn’t sufficient. ASML remains a good investment, just not a standout for aggressive capital deployment. So while I respect the long-term case, I’ll be reallocating my capital elsewhere in pursuit of higher-growth opportunities.
Is ASML Stock a Buy, Hold, or Sell?
On Wall Street, ASML stock has a consensus Moderate Buy rating based on three Buys, four Holds, and zero Sells. ASML’s average stock price target of $888 indicates a 11% upside potential over the next 12 months.
Wall Street estimates align with my current outlook, indicating that the stock is likely to perform solidly—but not exceptionally—in the near term and beyond. ASML is a stable business with a uniquely strong and hard-to-replicate moat in semiconductor equipment, making it a reliable place to park capital, but not the ideal vehicle for aggressively building wealth.
Given its role in the tech sector, the company is also significantly exposed to geopolitical tensions—particularly those involving China—which have impacted revenue and introduced added volatility risk. However, I believe U.S.-China relations are beginning to stabilize, with recent trade talks and signs of de-escalation pointing in a more constructive direction. As a result, I’m considering reallocating some capital from ASML into select Chinese stocks that may now offer a more favorable risk-reward profile.
ASML is Best Suited for Risk-Averse Investors
ASML is a company that deserves profound respect. However, that doesn’t automatically make its stock a top pick for active, opportunistic investors. In the world of investing, stable cash flows and consistent returns are great for preserving wealth and outpacing inflation, but truly building wealth often requires a more dynamic strategy and sharper timing.
ASML no longer fits that approach for me. It served its purpose well, and it remains a solid choice for those taking a more passive, long-term stance.