$ASML DCF valuation model (updated)
ASML is the only company on Earth that can make the machines needed to print every advanced AI chip.
Hi, community.
Today I would like to share my intrinsic value for ASML Holding N.V., leader in lithography systems for manufacturing semiconductors with 90% market share.
Key assumptions:
Explicit average 5Y/5Y growth @ 15.6%/7.3%
Long-term growth in perpetuity @ 2.6%
Starting Adj. EBITDA Margin @40% gradually improving to 49% by Y10
WACC @ 9.7%.
Adj. EBITDA exit multiple of 12.7
Tax rate 18% - in line with historical average
The input that drives reinvestment is forward-looking Sales to Capital ratio = 2.11
Historical growth rate (for context)
Historically, ASML has been an exceptional compounder: revenue increased from about €6.9bn in 2016 to €32.7bn in 2025, representing a CAGR of roughly 19%. Growth accelerated with the commercial adoption of EUV lithography, despite semiconductor-cycle volatility and export restrictions. Most recently, revenue increased 15.6% in 2025, driven by AI-related advanced Logic and Memory investment, EUV demand and a rapidly expanding installed-base service business. Historical 19% growth rate provides useful context, but ASML’s much larger revenue base makes some moderation in long-term growth a reasonable DCF assumption. That is why I am using a more grounded 15.6% rate within the first 5-year range and 7.3% subsequently until 2035.
Moat
Market participants unilaterally assign ASML a wide moat rating, supported by proprietary, hard-to-replicate EUV technology and a capital-intensive, specialized market structure that creates durable barriers to entry and strong customer lock-in.
Verdict
Shares are priced for perfection and do not represent an attractive entry point, in my view.
Disclaimer: This post is for informational and educational purposes only. I do not own shares in ASML but can buy/sell them at any time after this post is published. Not financial advice. Do your own research.
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