ASML’s €12 Billion Buyback Signals Confidence as the CEO Picks a Fight with Brussels

The $502 billion Dutch chip-equipment giant is sending two very different signals at once. On one hand, ASML is pouring cash into its own shares — €12 billion worth of buybacks planned through 2028, with €1.1 billion already spent in the first quarter alone. On the other, its chief executive has joined six other European industrial heavyweights in a public broadside against regulators, warning that the continent is bleeding competitiveness through overregulation and fragmented markets.

The share repurchases are humming along at a steady clip. In the first week of May, ASML scooped up nearly 63,000 of its own shares, spending roughly €16 million per day. Most of those bought-back shares are subsequently cancelled, a textbook move to boost earnings per share. The stock itself is trading around €1,301, within a whisker of its 52-week high set earlier this month, and has surged more than 31 percent since January.

The buyback program is underpinned by a cash machine that shows no sign of slowing. First-quarter net profit hit €2.8 billion, and management has guided for full-year revenue of between €36 billion and €40 billion. ASML’s near-monopoly in EUV lithography systems means that every major expansion in advanced chipmaking — especially for artificial intelligence — funnels orders its way.

Should investors sell immediately? Or is it worth buying Asml?

That geopolitical risk is very much on the table. The company’s exposure to China is shrinking: its share of revenue from the country is expected to fall to around 20 percent this year, weighed down by new US export restrictions that Washington is mulling. The so-called MATCH Act under discussion in the US Congress could tighten the screws further. Meanwhile, a high-stakes summit between President Trump and Xi Jinping is being shadowed by talks in Beijing involving top executives from Apple, Tesla, and Qualcomm — with ASML a virtual participant.

Yet the AI boom is more than offsetting that drag. TSMC recently confirmed $50 billion in new investment tied to AI chips, and SK Hynix placed an €8 billion order for EUV machines. The customer shift is clear: American tech giants are spending lavishly on AI infrastructure, and their Asian foundry partners need ASML’s gear to build it. Even a Norwegian startup, Lace Lithography, is trying to develop alternative manufacturing methods, but large institutional investors are undeterred. Mitsubishi UFJ Asset Management increased its stake by a double-digit percentage in recent weeks, and a dividend paid out in early May underscored the company’s solid capital base.

On the stock’s valuation, the numbers are starting to glare. ASML trades at roughly 42 times expected earnings for this year — ambitious by any measure. Across the semiconductor sector, the Philadelphia Semiconductor Index (SOXX) has rocketed 74 percent in just six weeks, and its relative-strength index has climbed above 90, deep into overbought territory. Some analysts see a correction of up to 25 percent if the AI investment cycle begins to cool.

For now, the market is betting that the political and policy environment will bend ASML’s way. The CEO’s joint statement with SAP, Airbus, and Siemens — representing a combined market capitalisation of nearly €1.1 trillion — calls for faster reform, a coordinated industrial policy, and looser merger rules in Europe. The short-term direction of the stock, however, will be decided not in Brussels but in Beijing. If the summit relaxes export curbs, ASML regains a key market. If the MATCH Act tightens the lid further, the rich valuation will come under the microscope.

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