ASML company shares (ASML)

Executive Summary

ASML has retraced 3.52% since the July 31 report to $1,593.24, reversing the prior rebound from $1,579 to $1,651 and extending the post-earnings consolidation that has now persisted for over two weeks. Fundamentals remain robust following the second guidance upgrade to €43–45 billion and confirmed High NA EUV commercialization, but near-term price action reflects market skepticism regarding the durability of AI capital expenditures. The core investment thesis—underpinned by a lithography monopoly, multi-year capacity expansion, and 75% memory revenue growth—is unchanged, though technical support levels are being tested.

Key Updates

Since the July 31 report at $1,651.44, ASML shares have declined $58.20 to the current $1,593.24, negating the prior 4.56% rebound. This marks the second failed recovery attempt within a week, following the July 29 bounce from $1,539.06 to $1,579.47. No new material fundamental developments have emerged; the three news items since the last report are explainers and market commentary rather than incremental earnings or order data. The price action is therefore interpreted as continued profit-taking and risk reduction ahead of broader tech sector earnings.

Current Trend

Year-to-date performance remains strongly positive at +48.92%, with the six-month return at +14.14%. However, near-term momentum is negative: the stock is down 9.95% over one month and has fallen 3.75% over five sessions. The current level sits between the July 29 intraday low of approximately $1,539 and the July 31 high of $1,651, defining a near-term consolidation range. A sustained break below $1,540 would open the door to a deeper correction toward the $1,450–$1,500 zone, while recovery above $1,650 is required to re-establish bullish control.

Investment Thesis

ASML’s investment thesis rests on its structural monopoly in EUV lithography and dominant >80% share in DUV systems, creating irreplaceable exposure to leading-edge semiconductor fabrication. The company is executing a multi-year capacity ramp, with EUV shipments projected to rise from 48 units in 2025 to 65 in 2026 and 85 in 2027, and management is evaluating 30% output increases in both 2027 and 2028. Second-quarter revenue of €9.33 billion and net profit of €2.92 billion exceeded consensus, while gross margin expanded to 54% with guidance for 55–57% in the third quarter. Memory-related revenue is forecast to grow 75% in 2026, diversifying the revenue base beyond logic. Long-term estimates point to €70 billion in revenue and €69 EPS by 2028, with 2030 sales potentially exceeding €80 billion.

Thesis Status

The investment thesis is intact. The fundamental drivers—unrelenting AI demand, TSMC and Intel capacity expansion, and High NA EUV commercialization—have not deteriorated. The recent 10% drawdown from highs is a valuation and sentiment adjustment rather than a fundamental reversal. Risks remain centered on export controls to China, emerging Chinese competition in mid-range equipment, and the possibility of hyperscaler capex digestion, but none of these factors have materially worsened since the July 15 earnings release.

Key Drivers

Primary catalysts include the second 2026 guidance raise to €43–45 billion with gross margin expansion to 54–56%, driven by AI infrastructure investments from TSMC, Intel, Samsung, SK Hynix, and Micron. Intel’s deployment of ASML’s $350–400 million High NA EUV systems for production marks a critical commercial milestone. TSMC’s reported 68% year-over-year June sales increase and planned packaging facility additions underscore end-demand strength. On the risk side, U.S. pressure regarding China exports and investor skepticism over sustained hyperscaler capex continue to overhang the stock. Reuters Morningstar Bloomberg CNBC

Technical Analysis

The stock is in a near-term downtrend within a long-term bull market. Price action shows a lower high at $1,651 (July 31) following the July 29 low of $1,539, with the current $1,593 midpoint suggesting indecision. Key support is the $1,540–$1,550 cluster; a decisive close below this level would target the $1,450 area. Resistance is layered at $1,620 (session highs), $1,650 (recent rebound peak), and the all-time high near $1,730. Volume patterns during the decline will be critical to assess whether institutions are distributing or accumulating on weakness.

Bull Case

• ASML raised full-year 2026 sales guidance for the second time to €43–45 billion and gross margin to 54–56%, with Q2 revenue and profit both exceeding consensus and Q3 gross margin guided to 55–57%, demonstrating exceptional pricing power and demand visibility. Morningstar
• The company holds a monopoly in EUV lithography and greater than 80% market share in DUV systems, with next-generation High NA EUV machines priced at $350–400 million and already deployed by Intel for production, creating deep competitive moats. Reuters Bloomberg
• Management is planning 30% capacity increases for EUV output in 2027 and evaluating a further 30% rise in 2028, supporting a pathway to €70 billion revenue and €69 EPS by 2028 with 2030 sales potentially exceeding €80 billion. Morningstar
• Memory revenue is projected to surge 75% in 2026, diversifying revenue streams beyond logic as AI drives demand for advanced DRAM and HBM, while major customers such as TSMC report 68% year-over-year sales growth. Financial Times CNBC
• ASML shipped 48 EUV systems in 2025 and guides to 65 in 2026 and 85 in 2027, providing a transparent, contracted multi-year revenue trajectory backed by deposits and technology roadmaps from the world’s largest chipmakers. Reuters

Bear Case

• Investor skepticism regarding the sustainability of AI capital expenditures from hyperscalers such as Google and Amazon poses a risk to future order growth if data center buildouts slow or enter a digestion phase. Reuters CNBC
• Ongoing U.S. pressure regarding exports to China threatens a material portion of addressable market revenue and could tighten further if geopolitical tensions escalate, directly impacting ASML’s mid-range and service exposure. Reuters CNBC
• Chinese rivals are emerging in ASML's mid-range product line, threatening its dominant greater than 80% DUV market share and potentially compressing margins in the non-EUV segment over the medium term. Reuters
• Execution risks across ASML's supply chain and concentration among key customers including TSMC and Samsung create operational vulnerability, while Morningstar's bear scenario modeling stalled growth and capacity digestion in 2029-2030 could reset valuation to the EUR 1,100-EUR 1,400 range. Reuters Morningstar
• The stock's 48.92% year-to-date gain and rapid ascent to nearly $700 billion market capitalization embed elevated expectations; any deceleration in AI-driven orders or hyperscaler capex digestion could trigger severe multiple compression and a drawdown from current levels. Morningstar Reuters