Ever wondered if Tokyo Electron’s surging popularity means it is actually a good buy, or if the market is just chasing hype? You’re not alone. Figuring out what the stock is really worth is on many investors’ minds.
Tokyo Electron has delivered powerful returns, up 39.0% over the past year and a remarkable 190.7% over five years, even after a recent pullback of 5.2% this week and a modest dip of 1.8% in the last month.
Major headlines have spotlighted the ongoing global demand for semiconductor equipment and Tokyo Electron’s role in supporting next-generation chip production. Recent news about further investment into advanced chipmaking technologies has only heightened market interest, fueling both excitement and speculation around the stock’s future prospects.
On our numerical valuation score, Tokyo Electron comes in at 2 out of 6, indicating there is plenty of room to dig deeper. Let’s break down what this score and other valuation approaches really mean for you as an investor, and stick around for an even better way to see the full valuation story at the end of this article.
Tokyo Electron scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates what a company is really worth by forecasting its future cash flows and discounting them back to today’s value. In other words, it tries to answer the question: if you owned all of Tokyo Electron’s upcoming cash generation for the long term, what would you pay for it now?
For Tokyo Electron, the current Free Cash Flow stands at ¥319.2 billion. Analysts have projected the company’s Free Cash Flow to continue increasing, rising to ¥657.0 billion by 2030. It is important to note that while analyst projections are available for the next five years, further estimates beyond that are based on systematic extrapolation.
Using the DCF method, the intrinsic value for Tokyo Electron’s stock is calculated at ¥17,288.41 per share. This model suggests the stock is currently trading at a 74.6% premium to its fair value, which implies it is significantly overvalued based on today’s cash flow expectations.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Tokyo Electron may be overvalued by 74.6%. Discover 917 undervalued stocks or create your own screener to find better value opportunities.
8035 Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tokyo Electron.
Story Continues
When assessing profitable companies like Tokyo Electron, the price-to-earnings (PE) ratio is a reliable valuation metric because it reflects how much investors are willing to pay for each unit of current earnings. A “normal” or “fair” PE ratio depends not just on raw profits, but also on how quickly a company’s earnings are likely to grow and the risks those future earnings face. Generally, higher growth rates or lower risks justify a higher PE, while lower growth or higher risks lead to a lower multiple.
Tokyo Electron currently trades at about 25.5x earnings. This is higher than the broader semiconductor industry average PE of 19.9x, but below the peer group average of 31.6x. So, while not the highest in its space, investors are paying a sizable premium over the standard industry rate.
To get a more tailored perspective, we look at Simply Wall St’s “Fair Ratio.” Unlike generic benchmarks, this incorporates Tokyo Electron’s specific earnings growth prospects, profit margins, scale, risk profile, and place within the semiconductor sector. This results in a Fair PE Ratio of 34.0x, which is comfortably above the stock’s current level. This suggests that, even after its strong run, Tokyo Electron’s valuation by earnings is actually undemanding compared to where it merits trading based on fundamentals.
Result: UNDERVALUED
TSE:8035 PE Ratio as at Nov 2025
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Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, powerful tool that lets you connect your view of Tokyo Electron’s story—what you expect for its future revenue, earnings, and margins—to your own fair value estimate. Instead of relying solely on ratios or past growth, Narratives let you shape a forecast based on your outlook and see how that plays out in fair value terms, making your investment thesis clear and actionable.
Through Simply Wall St’s Community page (used by millions of investors), you can easily build or follow Narratives, which dynamically update their valuations and outlooks as news and earnings arrive. This gives you a practical, up-to-date way to compare Tokyo Electron’s Fair Value to its current market price and decide when to buy, hold, or sell, anchored in the story you believe most. For example, some investors see aggressive growth and future AI demand driving fair values as high as ¥35,300, while more cautious voices put the number closer to ¥21,500. Your own Narrative makes you an active participant in the valuation, not just a bystander.
Do you think there’s more to the story for Tokyo Electron? Head over to our Community to see what others are saying!
TSE:8035 Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 8035.T.
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