Stock Split Watch: Is ASML Next?

ASML Holding (NASDAQ: ASML) has become a crucial player in the artificial intelligence (AI) and semiconductor supply chains, and its stock price reflects this position. Shares of the company are up by over 50% so far in 2025 and are trading close to $1,040 (as of Nov. 28). The company's market capitalization is over $403 billion.

This combination of a share price above $1,000, dominance in the lithography space, and impressive growth trajectory makes ASML a prime candidate to watch for a potential stock split.

Although there has been no announcement or guidance from management regarding this possibility, retail investors may want to keep an eye on the stock based on the company's strong fundamentals and management's historical behavior. Here's why.

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High absolute share price

A stock split does not directly change the intrinsic market value of a company. However, by reducing the price of an individual share, it can help make the stock more approachable to a wider pool of investors. This can temporarily affect the company's market capitalization, sending it higher or lower depending on the type of split. Fractional shares have definitely reduced the need for stock splits, but not all brokerages offer them.

With shares trading above $1,000, ASML is now at the kind of high nominal share-price levels at which companies such as Nvidia and Amazon have historically chosen to split. A stock split can help expand ASML's shareholder base, especially since new retail investors tend to prefer a lower entry price and higher liquidity.

Historical stock splits

ASML has undergone four stock splits in its public life, with the most recent being an 8-to-9 split in October 2007. While the company has not undergone a stock split recently, historical stock splits highlight management's comfort in adjusting the share count when needed.

Strong financial momentum

ASML stands to benefit from a potential stock split, considering that retail interest in the stock is already strong. The company's dominance in deep ultraviolet (DUV) and near monopoly in advanced extreme ultraviolet (EUV) lithography systems used to manufacture cutting-edge AI and memory chips has positioned it at the center of the ongoing AI revolution.

In the third quarter, ASML generated revenues of 7.5 billion euros and net income of 2.1 billion euros. Bookings were also impressive, with net system orders of 5.4 billion euros. Of these, 3.6 billion euros worth of orders were for EUV lithography systems.

Management expects fiscal 2025 sales to be close to 32.5 billion euros and gross margin of 52%. The company is also guiding for fiscal 2030 revenue of 44 billion euros to 60 billion euros and long-term gross margins of 56% to 60%.

Considering the company's large revenue base and solid future projections, ASML's share price can continue to grow in the coming years. This makes a stock split even more attractive, as investors will want to take a stake in this core AI infrastructure player with a solid competitive moat.

What does all this mean for investors?

While no one knows for sure whether ASML will execute a stock split, it may prove to be a smart decision for the above several reasons. However, even without a stock split, ASML's strong technological edge, sticky customer base, and push into generative AI software with the recent acquisition of an 11% stake in Mistral AI have positioned it as a powerful long-term winner.

AI continues to be a major growth engine for ASML. Visible Alpha analysts are projecting the company's EUV lithography sales to grow 41% year over year to 11.1 billion euros, while sales of high-NA EUV equipment, the most advanced type, are projected to triple to 1.7 billion euros in fiscal 2025. They expect total revenue to rise 14% year over year to 32.3 billion euros.

Bank of America Securities has highlighted that demand for DRAM is higher than the available supply. Hence, DRAM manufacturers are planning for capacity additions in 2026 and 2027. This trend could boost demand for ASML's lithography systems. Additionally, chipmakers are now using EUV lithography in more chip manufacturing steps. This further supports demand for ASML's EUV systems.

ASML currently trades at 34.6 times forward earnings, which seems rich at first glance. However, considering the many AI-powered tailwinds and its market dominance, investors can consider a small stake in this stock now, even when a stock split is not on the horizon.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Amazon, and Nvidia. The Motley Fool has a disclosure policy.