Last Update 15 Dec 25
Fair value Increased 27%ASML: Elevated EUV Demand Expectations Will Likely Expose Downside If 2026 Recovery Slips
Analysts have significantly raised their fair value estimate for ASML Holding from approximately EUR 573 to about EUR 729 as they factor in a series of higher Street price targets, expectations for stronger medium term revenue growth, resilient margins, and increased confidence in EUV led demand from 2026 onward.
Analyst Commentary
Street research on ASML has turned markedly more optimistic in recent weeks, with multiple major institutions lifting price targets into the upper triple digits and reiterating positive ratings. The upward revisions are broadly tied to better than expected Q3 results, improving sentiment around memory capex into 2026, and rising confidence in ASML's ability to monetize EUV demand as leading edge nodes scale.
Several banks now see ASML as one of the key structural beneficiaries of a recovery in DRAM and advanced logic spending, highlighting stronger gross margin trajectories, disciplined operating expenses, and robust EUV shipment pipelines into 2026 and 2027. Upgrades in rating alongside material price target hikes suggest a growing belief that current estimates still underestimate the earnings power of ASML's installed base, services, and next generation tool portfolio.
Large global houses have also boosted their longer term earnings forecasts, noting that recent results helped address prior concerns about order visibility and potential margin compression. Adjustments to 2025 and 2026 EPS assumptions have mainly come from higher EUV volumes, improved mix, and better operating leverage, reinforcing the idea that ASML can sustain premium valuation multiples if execution remains solid through the capex cycle.
At the same time, not all research is uniformly positive, and a number of Bearish analysts are emphasizing that the rapid rerating leaves less room for error on both execution and demand.
Bearish Takeaways
- Bearish analysts argue that after a steep rally and aggressive price target revisions higher, ASML's valuation now embeds optimistic assumptions for memory and foundry capex recovery, leaving downside risk if the 2026 demand inflection is delayed or weaker than expected.
- The recent downgrade to a more neutral stance highlights concerns that near term guidance, particularly for 2025, could remain subdued relative to elevated expectations, raising the risk of multiple compression if order momentum or EUV bookings soften.
- Some caution that execution risk around scaling EUV deliveries and meeting heightened margin targets is rising, as any slippage in tool shipments, supply chain constraints, or slower customer ramps could pressure the premium growth narrative now reflected in the share price.
- Bearish analysts also flag that increasing concentration of future growth in a handful of large customers and advanced nodes may expose ASML to higher cyclical and geopolitical risk, which is not fully captured in current valuation multiples.
What's in the News
- Berenberg raised its ASML price target to EUR 1,050 from EUR 735, citing strong Q3 results and positioning to benefit from DRAM spending growth from 2026 onward (Berenberg).
- Deutsche Bank increased its ASML price target to EUR 1,000 from EUR 900 and reiterated a Buy rating after what it called solid Q3 results (Deutsche Bank).
- Morgan Stanley lifted its ASML price target to EUR 975 from EUR 950 while maintaining an Overweight rating on the shares (Morgan Stanley).
- ASML provided guidance for Q4, forecasting net sales of EUR 9.2 billion to EUR 9.8 billion with a gross margin of 51% to 53%, and indicated it does not expect 2026 sales to be below 2025 (company guidance).
- ASML CEO Christophe Fouquet warned that the Nexperia related tensions between the Netherlands and China highlight a fragile semiconductor supply chain and called for responsible dialog among stakeholders (Bloomberg).
Valuation Changes
- The Fair Value Estimate has risen significantly from approximately €573 to about €729, reflecting a higher assessment of ASML's intrinsic worth.
- The Discount Rate has increased slightly from around 7.9% to about 8.4%, implying a modestly higher required return for investors.
- The Revenue Growth assumption has moved sharply higher from roughly 2.0% to about 5.2%, indicating stronger expected medium-term top-line expansion.
- The Net Profit Margin forecast remains at approximately 27.7%, signaling expectations for stable profitability.
- The future P/E multiple has increased meaningfully from about 28.2x to roughly 32.9x, pointing to a richer valuation based on forward earnings.
Key Takeaways
- Geopolitical tensions and rising technology nationalism threaten market access, intensify competition, and could undermine ASML's dominant industry position.
- Heightened R&D costs, overcapacity risks, and evolving chip architectures may pressure margins and weaken demand for ASML's core and service offerings.
- Robust demand for advanced chips, leading technology, recurring service income, and global expansion position ASML for sustained growth and earnings stability.
Catalysts
About ASML Holding- Provides lithography solutions for the development, production, marketing, sales, upgrading, and servicing of advanced semiconductor equipment systems.
- The company faces growing risks from escalating geopolitical tensions and the proliferation of trade barriers, which are causing significant uncertainty for ASML's key customers. These factors threaten to restrict access to major global markets, disrupt supply chains, and potentially limit future revenue growth.
- There is mounting evidence that rising technology nationalism may result in an acceleration of domestic semiconductor equipment development by major countries, creating competition and eroding ASML's dominant position and long-term revenue streams.
- Persistently increasing R&D requirements and costs to maintain leadership in EUV and High NA lithography are likely to put sustained pressure on net margins, particularly if customer CapEx slows or innovation cycles lengthen.
- The risk of overcapacity, as recent aggressive foundry expansions and wafer-fab buildouts may not be matched by demand, could lead to a drawn-out period of weaker bookings, heightened pricing pressure, and backlog declines, negatively impacting both top-line and earnings visibility over the next several years.
- Structural advances in chiplet architectures, 3D stacking, and alternative packaging technologies threaten to slow lithography tool replacement cycles, dampen upgrade demand for ASML's systems, and impede recurring revenues from the company's installed base and services business.
ASML Holding Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- This narrative explores a more pessimistic perspective on ASML Holding compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
- The bearish analysts are assuming ASML Holding's revenue will grow by 2.0% annually over the next 3 years.
- The bearish analysts assume that profit margins will shrink from 29.3% today to 27.7% in 3 years time.
- The bearish analysts expect earnings to remain at the same level they are now, that being €9.4 billion (with an earnings per share of €28.57). The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 28.2x on those 2028 earnings, up from 28.0x today. This future PE is lower than the current PE for the GB Semiconductor industry at 39.2x.
- Analysts expect the number of shares outstanding to decline by 1.48% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 7.94%, as per the Simply Wall St company report.
ASML Holding Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Persistent and growing demand for advanced logic and memory chips driven by artificial intelligence, high-performance computing, and ongoing digitalization is expected to sustain high utilization and orders for ASML's EUV lithography tools, leading to potential revenue and earnings growth over the long term.
- ASML's leadership position and technological moat in EUV and the introduction of High-NA EUV tools enable the company to command higher average selling prices and maintain or improve gross margins, positively impacting profitability and net income in coming years.
- The installed base management segment continues to grow robustly alongside recurring, high-margin service and upgrade revenues, underpinning stable long-term cashflows and potentially increasing overall earnings stability regardless of near-term cycles.
- The company's multi-year customer backlog, strong momentum in both logic and memory segments, and new fab investments globally (including in China) provide visibility into future revenue streams and mitigate risks associated with short-term order volatility.
- ASML's own long-range outlook, supported by secular semiconductor trends and customer roadmaps, forecasts revenue between €44 billion and €60 billion and gross margins up to 60 percent by 2030, suggesting upside potential for long-term investors and the possibility of upward share price pressure.
Valuation
How have all the factors above been brought together to estimate a fair value?- The assumed bearish price target for ASML Holding is €572.55, which represents two standard deviations below the consensus price target of €757.84. This valuation is based on what can be assumed as the expectations of ASML Holding's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
- However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €950.0, and the most bearish reporting a price target of just €500.0.
- In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be €34.1 billion, earnings will come to €9.4 billion, and it would be trading on a PE ratio of 28.2x, assuming you use a discount rate of 7.9%.
- Given the current share price of €680.2, the bearish analyst price target of €572.55 is 18.8% lower. Despite analysts expecting the underlying buisness to improve, they seem to believe the market's expectations are too high.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
