1 Brilliant Artificial Intelligence (AI) is down 30% from an all-time high.

Key Points

• To manufacture cutting-edge chips, you need an ASML machine.

• Stock valuations are well below historical levels.

• ASML results regularly exceed conservative management guidance.

• 10 shares I prefer more than ASML

Few companies have important enterprise products for the technology infrastructure of the modern world ASML (NASDAQ:ASML). Without chipmaking equipment provided by a Dutch-based manufacturer, many of the world's most innovative technologies would be impossible. It will become one of the most important companies in the world, even if many people have never heard of it.

For a long time, ASML has been a profitable investment, but stocks have been struggling recently – down more than 30% from the all-time high we touched in July 2024. I think this pullback will provide a great opportunity to buy stocks in this major support player in the AI ​​sector and other advanced technologies.

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ASML was a victim of government policies around the world

ASML manufactures lithography machines and tracks extremely fine patterns on circuits of silicon chips. Its topline extreme ultraviolet (EUV) lithography machine is the only one that can print the latest, most powerful, and most dense chips. No other company has ever been able to build EUV machines. Also, because Western countries don't want this technology to go to China, they are highly regulated, so the Netherlands and the US government have strict restrictions on the types of machines that ASML can export to China or its allies. In fact, last year new regulations were introduced that would prevent ASML from serving several machines previously allowed to sell to Chinese companies.

As a result of these export bans, sales to one of ASML's largest economies have been reduced. This led investors to bid on the stock in 2024.

2025 was a relatively strong year for ASML's business, but tariffs have made it difficult to predict beyond the issue. Management is cautious about guidance for the year as they don't know how tariffs will affect their business. In its second quarter report, management said tariffs had no greater quarter impact than originally anticipated. As a result, ASML generated 7.7 billion euros for 7.7 billion euros. For the third quarter, the company said it expects revenues between 7.4 billion and 7.9 billion euros, but if tariffs have a major negative impact on the economic situation, it could be shorter.

Given all planned spending on new chip capacity to meet AI-related demand, investors would be wise to assume that ASML will benefit. However, despite the company preparing for growth, it remains conservative in its guidance. This conservative attitude has left the market significantly weaker to ASML outlook, despite all signs pointing to 2026.

This will make ASML an opportunity to purchase at the current stock price.

ASML ratings have not been as low since 2023

Compared to the past five years, ASML historically trades at low price (P/E) ratios and forward P/E ratios.

ASML PE ratio data by YCHARTS.

With low levels of expectations for ASML, investors should not be surprised if their valuations rise over the next year, especially if management commentary becomes more bullish, especially as demand increases in line with chipmakers' efforts to expand capacity.

This will allow ASML to be returned to normal evaluation ranges by your mid-30s. This is completely acceptable given the level of growth, given the lack of direct competition.

ASML is the best stock to buy now and hold for more than a few years, allowing chipmakers to enjoy the benefits of increasing production capacity. Just because the market is not so bullish at ASML now, that doesn't mean it won't be in the future. This unusual moment offers an ideal opportunity to load stocks in stocks that I believe are one of the best values ​​on the market today.

Should I invest $1,000 in ASML now?

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Keithen Drury has an ASML position. Motley Fools recommends with a job at ASML. Motley Fools have a disclosure policy.