ASML
Note: This is a daily stock update and the information stands true as of 14/10/26, 09:00 CET
Company Update:
Gross margin was slightly higher than company's guidance of 55%-57% mainly due to higher sales from upgrades business. Overall, gross margin came at 57.5%.
Sales in Q3 were evenly split geographically as China, Taiwan, and South Korea accounted for 23%, 32%, and 31% respectively.
ASML expects Q4 2026 total net sales between €14.2 billion and €15.2 billion, and a gross margin around 57%
ASML reported that its FY 26 sales will be in the range of €44bn - €45bn (earlier €43bn - €45bn). Market expectations were around €44bn
In Q2, the company announced that they are trying to improve the EUV and DUV capacity by 30%, but the Q3 release states that, given customer demand, it might not be enough.
Our FY 26 sales stands at €44.9bn and we project a 30% revenue growth in FY 27 which we will increase slightly. This should increase our TP slightly but not enough to be building new positions. We believe the stock is correctly priced and to hold. We don't see extra high valuation so no reason to sell as well.
We expect a slight negative share price reaction today as there were no 'big surprises' which the market has gotten used to.
Expert Opinion:
The comments by the management beyond 2026 are positive. The management explained that despite the planned investment in DUV and EUV, its planned capacity for 2027 and 2028 is now expected to fall short of customer demand. We think this won't be a massive surprise for the market. The key question is whether the expected demand can really be financed over the next few years. Interesting chart today from ZeroHedge on hyperscaler CDS widening, indicating that the market is questioning the expected returns on such investments.
The comments by the management beyond 2026 are positive. The management explained that despite the planned investment in DUV and EUV, its planned capacity for 2027 and 2028 is now expected to fall short of customer demand. We think this won't be a massive surprise for the market. The key question is whether the expected demand can really be financed over the next few years. Interesting chart today from ZeroHedge on hyperscaler CDS widening, indicating that the market is questioning the expected returns on such investments.
In all, we think that too much is already embedded in the sector's valuation, and we remain cautious on semiconductors and ASML. Even with our aggressive growth expectations, ASML trades on a PE2028 of 23.3x (vs 40.5x for 2026). So, if all goes well ASML is just expensive but if things go sideways...
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