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.