ASML Is a Hidden Gem in This Technology Rally, a Catch Up Play

Key Points

• ASML stock has been rallying aggressively this month, as markets wake up to the fact that there is a huge gap in valuations to be filled compared to peers.
• This unjustified gap has created newfound interest from Wall Street analysts in ASML stock.
• Institutional buying is starting to take place again as short sellers also leave the scene recently.

Professional traders and investors usually base their opportunity pipelines on a relative basis, benchmarking the fundamentals that matter most for their ideas in a way that clearly outlines the gaps to be filled, leading them to the best profit opportunities. 

Within the technology sector today, there is one such outlier that most are still not aware of, though 'most' doesn’t mean 'all,' as some on Wall Street have been quietly acquiring shares of this stock.

In the semiconductor industry, manufacturers backing the artificial intelligence race are all the hype today, so shares of ASML Holding NASDAQ: ASML are worth examining.

This company has enough merit to justify being added to a watchlist for this industry tailwind; however, the message becomes even stronger when investors stack it up against other close peers inside the same industry.

One clear competitor (more like a peer) is Taiwan Semiconductor Manufacturing NYSE: TSM, while another clear ally, in terms of being both a customer and a leader in wafer and raw material consumption, is NVIDIA Corporation NASDAQ: NVDA.

There is a significant gap between ASML and these two other players, which should be bridged in due time. However, it may already be too late for retail investors by the time this becomes a mainstream theme.

Making Sense of ASML’s Rally

Over the past month alone, shares of ASML have rallied by 25.8%, sending the stock to a new 52-week high and justifying further momentum buying from the institutional side of Wall Street’s equation.

More than that, ASML outperformed NVIDIA and Taiwan Semiconductor by a respective margin of 26% and 9%, which is the foundation of any potential buy thesis.

Several factors can explain this outperformance; however, the most pressing one is that ASML is only a $318 billion company, despite its vital role in the assembly process of today’s industry-leading semiconductors. Taiwan Semiconductors shares the same position, yet the size difference couldn’t be clearer.

Now valued at $1.1 trillion in market capitalization, Taiwan Semiconductor is nearly four times the size of ASML. Yet, they both share in the importance they carry within the industry.

Although NVIDIA is not a wafer or raw material manufacturer itself, it still trades in the $4.3 trillion range, creating a clear expectation of where these businesses can reach.

The fact that ASML has fallen behind this much is not a new phenomenon on Wall Street, which is why the stock is experiencing this newfound momentum as market participants find the story compelling enough in terms of opportunity. From here on out, the expectations are pretty high for ASML, and that’s where retail investors need to really think this through.

Markets Express Their Bullishness for ASML Stock

Morgan Stanley analysts upgraded their rating on ASML stock to Overweight from Equal Weight in September 2025; this time, the rating change was accompanied by a € 950 per share price target (roughly $1,111 by today’s exchange rate).

From where ASML sits today, this view calls for a new 52-week high to be broken and an additional 17% of upside potential. Analysts at Erste Group followed this call, as they also raised their ratings from a Hold to a Buy in September, showing retail investors the beginning of what could be a longer wave of newfound optimism for the company.

Regarding the buy side, there is even more evidence pointing to the upside story found in ASML stock. While not the most prominent position, Canal Capital Management increased its holdings in ASML by 10.8% in September, bringing its position to a new high of $6.3 million today and reaffirming its bullish stance on the company’s future.

Financials also play a significant role in this new rotation back into ASML and its momentum. The company’s latest financial quarter reported a 23% net revenue growth compared to the same quarter last year. This justifies the view that these products and proprietary manufacturing technology remain in high demand during this cycle.

Last but not least, 7.2% of ASML’s short interest declined over the past month, signaling a potential sign of bearish capitulation, which makes sense, seeing just how aggressively the stock has rallied over a short time. Outperforming the larger names in the space is always a good sign, and there is likely still significant growth to be priced into the stock for the future.