ASML is a chip-equipment maker with demand exceeding planned 2027-2028 supply, but at 54x earnings and 57x free cash flow and no safety margin its conservative DCF implies only ~2.6% annual return over ten years; cyclical demand and export restrictions are risks, and 50% growth over four years is not exceptional.

Here is another expressive counter-argument. ASML, the company that sells chip-making machines , continues to report extremely high demand.

Okay guys, the second arrow is ASML. So, again , the market value of this company is $640 billion . Its institutional value is 663 billion. So, there is approximately $23 billion in debt primarily.

This is nothing when you generated $11.3 billion last year, and $8.3 billion annually over the past five years in free cash flow. Guys, great returns on capital, growing profit margins, but they are still fairly stable and not volatile.

Now, I will say this, the price-to-free cash flow ratio of 57 seems a little high here. The price-to-earnings ratio of 54 also seems a bit high. But guys, overall, it still looks like a great company by every measure here.

Members of our community classify it as a buying opportunity.

Firstly, a strategic approach that is difficult to imitate. ASML's lithography systems are essential in the manufacture of advanced chips. If chip manufacturers continue to develop process technology, they may need more capable tools, which supports ASML’s pricing power and long-term importance.

Secondly, the demand is clearly increasing. In its update issued on October 14, 2026, which was just days ago, ASML said that the momentum of the application record is on the rise.

And that its planned supplies for 2027-2028 will not fully meet customer demand. That's really great.

Number three, strong economics and good cash generation. Al-Arkan's data shows a return on capital of approximately 38% and a net profit margin of 30%. Good results here.

In the worst-case scenario, the assessment leaves little room for disappointment. The data from “Al-Arkan” puts ASML at a price-to-earnings ratio of 40-54 times, and 57 times for free cash flow.

Demand and profits are cyclical. This is the most important thing, guys. The chip industry is highly cyclical. This means that it goes through cycles, up and down , up and down .

This is extremely important. It's a "bread or famine" situation in these companies.

Third, the geopolitical risks of implementation are significant. Export restrictions may limit sales or services to some customers , while complex regulations and restricted supply chains make expanding production capacity difficult.

Just like in Nvidia , we have six checkmarks and two crossmarks . Everything looks good; in fact, their outstanding share count is at a level comparable to Nvidia's.

Hey guys, look at this. From $43 per share to $109 per share in the next four years. Right now, the stock is currently at the level of $1600 and some change. If you assign a price-to-earnings ratio of 22 to the company's earnings in 2030, you are looking at...what is this?

Valued at $2400 per share. Well, not bad. This company is currently at $1600. That's 50% growth in what, 4 years? Well, it's not as big a deal as you might think in the world of artificial intelligence.

Revenues are growing from 49 billion to 90 billion, almost doubling in 4 years. This is revenue growth of about 15%, maybe 16%. Revenue growth, 8, 12 and 16 cycles, my dear. I still think 12 might be too high, but we accept it for now.

For profit margin and free cash flow margin , I set 23, 26 and 29. For the price-to-earnings ratio 10 years from now, I set 17, 20 and 23 . Guys, I'm not going to lie to you, this number may be low because their returns on capital are very high and improving.

Even up to the number 10 years, excluding the last 5 years, it is still in the tens category. So, this may be a low number, but I am satisfied with it at the moment.

And of course, with a 9.5 percent return rate and no safety margin, I pressed the analyze button. The current share price is 1,670. I have a low price of 550, a high price of 1,585, and an average price of 940, which means that if my average assumptions are met, I am looking at an annual return of around 2.6% according to the discounted cash flow model for the next ten years.

It's not something that would make me jump out of bed with excitement . However, you might think my assumptions are too low . This may well be the case. I tend to be more conservative in my growth assumptions than most people.