Last Update 20 May 26

Fair value Increased 1.32%

ASML: Future Memory And North America Demand Will Drive Upside

Analysts have increased ASML Holding's implied price target by €19.34, citing its unique position in European semiconductors and expectations for sustained lithography demand, particularly in memory and in North America.

Analyst Commentary

Recent research on ASML highlights a cluster of upward price target revisions, with bullish analysts focusing on the company’s position in lithography tools and its exposure to memory and North American customers. While most recent commentary is positive, there are still areas that investors may want to monitor around execution and valuation.

Bullish Takeaways

Bullish analysts point to sustained demand for lithography capacity as a key support for ASML’s long term revenue visibility, which they see as important for justifying higher valuation targets.
Exposure to memory and high North America demand is viewed as a positive mix for growth potential, especially as customers invest in advanced manufacturing capacity.
Several recent price target increases, including large upward revisions of double and triple digit euro and dollar amounts, signal that bullish analysts see room for ASML’s current valuation to reflect higher earnings expectations.
One major bank highlights tighter foundry and DRAM supply and higher EPS estimates for calendar years 2026 to 2028, which they use to support a higher price target in the €1,800 to €1,900 range.

Bearish Takeaways

Even with higher targets, some cautious views center on whether ASML can consistently deliver on the earnings paths implied by these revisions, particularly given the long lead times and complexity of lithography tools.
The stock’s valuation, after multiple rounds of price target increases, may already bake in a strong execution track record, leaving less room for disappointment on orders or margins.
Reliance on memory and North America demand, while a support for the bullish case, can also be a source of risk if customer capex plans or regional demand patterns change.
The emphasis on tighter foundry and DRAM supply and raised EPS estimates underscores that part of the thesis is linked to sector level conditions, which may not remain aligned with current assumptions over time.

What's in the News

Big tech companies are increasing spending on AI related infrastructure, and ASML is seeing higher demand for its chipmaking tools as part of that trend (WSJ).
TSMC's deputy co COO stated that TSMC will not use ASML's newest chipmaking machine, which puts some focus on how quickly the latest tools are adopted across customers (Bloomberg).
SK Hynix plans to buy €8b of chipmaking tools from ASML, highlighting continued equipment orders from a major memory customer (Bloomberg).

Valuation Changes

Fair Value: updated from €1,463.42 to €1,482.76, representing a modest uplift of about 1.3% in the implied value per share.
Discount Rate: moved from 8.69% to 9.15%, indicating a slightly higher required return being applied to future cash flows.
Revenue Growth: adjusted from 16.07% to 16.44%, reflecting a small change in the long term sales growth assumption for euro-denominated revenues.
Net Profit Margin: revised from 34.30% to 34.51%, indicating a marginal increase in the expected share of euro revenues converting into earnings.
Future P/E: moved from 38.0x to 39.8x, suggesting a somewhat higher earnings multiple being used in the updated valuation work.

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Key Takeaways

ASML's innovations in EUV and High-NA platforms enhance productivity, reduce costs, and bolster potential revenue and margin growth.
AI demand and strategic global collaborations are poised to boost ASML's lithography equipment sales, stabilizing and potentially increasing future earnings.
Geopolitical tensions and macroeconomic fluctuations could impact ASML's revenue growth, cost structure, and financial predictability, particularly amid challenges in High-NA technology adoption.

Catalysts

About ASML Holding

Provides lithography solutions for the development, production, marketing, sales, upgrading, and servicing of advanced semiconductor equipment systems.What are the underlying business or industry changes driving this perspective?

ASML's advancements in EUV technology, particularly with the Low-NA NXE:3800E and High-NA platforms, enhance productivity and support cost of technology reduction. This is expected to drive further adoption and could positively impact revenue and margins.
The growth in artificial intelligence (AI) demand is expected to continue supporting semiconductor industry expansion, which should drive higher demand for ASML's lithography equipment, thereby potentially boosting revenues.
The introduction and ramp-up of High-NA EUV systems, with phases leading to full-scale manufacturing by customers, provides a roadmap for increasing system sales, supporting long-term earnings growth.
Installed Base Management revenues are anticipated to increase, driven by higher service levels, expansion of the installed EUV base, and a rise in their upgrade business, positively influencing revenue and net margins.
ASML's efforts to handle tariff uncertainties and collaborate with global customers suggest resilient order inflows and strategic positioning, which could stabilize and improve future earnings.

ASML Holding Earnings and Revenue Growth

ASML Holding Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming ASML Holding's revenue will grow by 16.4% annually over the next 3 years.
Analysts assume that profit margins will increase from 29.7% today to 34.5% in 3 years time.
Analysts expect earnings to reach €18.4 billion (and earnings per share of €50.46) by about May 2029, up from €10.0 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €23.5 billion in earnings, and the most bearish expecting €14.8 billion.
In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 39.9x on those 2029 earnings, down from 51.2x today. This future PE is lower than the current PE for the GB Semiconductor industry at 48.0x.
Analysts expect the number of shares outstanding to decline by 0.52% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.15%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

The uncertainty surrounding increasing tariffs could directly impact ASML's cost structure and gross margins, as the company and its customers work to absorb these additional costs.
Significant geopolitical risks, especially related to China and the U.S., could disrupt ASML's operations and sales, particularly impacting revenues from its largest customers.
The transition from R&D to production for High-NA systems presents challenges and the timing of customer adoption due to requirements for tool maturity, potentially impacting ASML's revenue growth from this new technology.
Potential changes in macroeconomic conditions could affect demand for semiconductor technology, introducing risks to ASML's revenue growth projections and booking levels.
Variability in bookings and the dynamics of customer order timelines can introduce uncertainty into ASML's financial performance, impacting revenue visibility and long-term planning.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of €1482.76 for ASML Holding based on their expectations of its future earnings growth, profit margins and other risk factors.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €1900.0, and the most bearish reporting a price target of just €980.0.
In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be €53.2 billion, earnings will come to €18.4 billion, and it would be trading on a PE ratio of 39.9x, assuming you use a discount rate of 9.2%.
Given the current share price of €1333.0, the analyst price target of €1482.76 is 10.1% higher.
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

AnalystConsensusTarget 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 AnalystConsensusTarget 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 AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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