Third-quarter results confirmed extraordinary demand visibility with contract liabilities reaching €9.30 billion, yet fiscal 2026 guidance was largely anticipated. At 30.6 times fiscal 2027 earnings, the valuation fairly reflects near-term AI lithography expansion. Reiterate Hold.
Key points
- €11.66 billion in third-quarter revenue and €5.17 billion in operating profit met upgraded expectations across advanced logic and memory.
- €9.30 billion in non-current contract liabilities confirms surging customer down payments that push delivery visibility through 2028.
- 32.5 times estimated fiscal 2027 earnings fairly prices ASML's monopoly power against memory capex digestion risks.
The call
At $1,649.31, the market requires ASML to hit the high end of €45 billion in fiscal 2026 revenue, sustain 20% annual top-line growth through 2028, and hold operating margins above 42%. It assumes smooth customer adoption of €350 million High-NA scanners and uninterrupted Chinese trailing-edge demand despite ongoing trade discussions.
Quarterly revenue and operating income trajectory (€ billions)- Quarterly Revenue (€B)
- Operating Income (€B)
Source: Company quarterly filings through September 27, 2026, and management guidance for Q4 2026.
Instead, we believe 2027 revenue growth moderates to 18% as memory manufacturers absorb 2026 additions and advanced foundries evaluate High-NA tool costs against Low-NA multi-patterning. Third-quarter down payments validate unprecedented visibility, but the valuation already discounts this acceleration. Trading within 6% of our unchanged 12-month target, the stock remains a balanced Hold.
Target price sensitivity to 2027 EPS and valuation multiple ($)- Base Case ($53.95 EPS)
- Bull Case ($58.00 EPS)
- Bear Case ($48.00 EPS)
Source: Analyst valuation model across fiscal 2027 diluted EPS and price-to-earnings multiples.
Valuation
| Valuation metric | Value |
|---|
| Fiscal 2027 estimated revenue | €52.5 billion ($58.9 billion) |
| Fiscal 2027 operating margin | 42.0% |
| Fiscal 2027 estimated net income | €18.29 billion |
| Fiscal 2027 diluted share count | 380.0 million |
| Fiscal 2027 estimated diluted EPS | €48.13 ($53.95) |
| Target price-to-earnings multiple | 32.5 times |
| 12-month price target | $1,753.38 |
We maintain our 32.5 times target multiple on fiscal 2027 estimated earnings of $53.95, reflecting ASML's irreplaceable lithography monopoly and high pricing leverage. At 32.5 times, the 12-month target of $1,753.38 offers a 6.3% implied return from today's $1,649.31 price. This balanced asymmetry supports reiterating our Hold rating.
Risks
- Broader Dutch or American export restrictions curb deep ultraviolet shipments to China, detectable in declining non-EUV tool billings.
- Major foundries delay High-NA insertion until 2029 to minimize capital intensity, indicated by stagnant EXE backlog disclosures.
- Customer fab construction delays create delivery deferrals, visible in expanding finished-goods inventory balances.
What would change my mind
Customer conversion of 2028 High-NA capacity inquiries into binding purchase orders that push fiscal 2027 earnings power above $60.00 per share.