ASML Stock Breakout Requires 2027 EUV Capacity and Strong Demand Signals

Overview

This report is JPMorgan’s pre-release preview before ASML’s 2026 Q2 report. It argues that while 2Q26 revenue, gross margin, and EPS may come in slightly below market consensus, near-term performance is not the main variable that determines the stock. The critical drivers for a renewed stock breakout are whether ASML can prove that growth from 2027 EUV shipments, immersion tool demand, and capacity planning after 2028 can significantly outpace fab-equipment capex.

Core views

Core views include: first, JPMorgan expects 2Q26 revenue of €8.7bn, gross margin of 51.7%, and EPS of €6.67, all generally within company guidance but slightly below consensus. Second, ASML may raise FY26 revenue guidance if DUV shipments remain stronger than expected. Third, ASML has an opportunity for clearly above-peer growth in 2027, because in 2026 the EUV supply chain could not ramp quickly due to later customer order starts. Fourth, if the company discloses 90 to 100 EUV systems in 2027, strong immersion demand, and expansion plans after 2028, it would help attract U.S. and Asian investors and support a narrowing valuation discount.

Analysis framework

The report combines earnings preview, consensus comparison, company guidance comparison, peer valuation comparison, and scenario-catalyst analysis. The near-term section centers on 2Q26 revenue, gross margin, EPS, and FY26 guidance; the medium-term section focuses on 2027 EUV shipment capacity, High-NA launch, rising EUV penetration in DRAM, improving storage cycle, and valuation relative to U.S. semiconductor equipment peers.

Methodology notes

• earnings forecastearnings preview and consensus comparison

  Compares JPMorgan’s forecasts for revenue, gross margin, EPS, and FY26 revenue growth against company guidance and Bloomberg consensus to assess near-term earnings risk and expectation gaps.

  This framework shows JPMorgan’s 2Q26 estimate is slightly below consensus but still within the company guidance range, so the report views near-term earnings as unlikely to be the main stock driver.

• Valuation methodsrelative valuation and historical range comparison

  Compares ASML’s historical forward P/E range with relative premium or discount versus U.S. semiconductor equipment peers such as Applied Materials, Lam Research, and KLA.

  The report notes ASML is currently at a discount to U.S. peers, while historically it has typically commanded a meaningful premium; if 2027 growth is stronger than peers, valuation can re-rate.

• industry cycleWFE and storage upcycle analysis

  Assesses whether ASML growth can outpace fab-equipment capex and incorporates rising DRAM prices, increased EUV penetration in DRAM, and the High-NA cycle to judge demand elasticity.

  The report believes ASML has meaningful exposure to major memory players, so if the storage upcycle continues, it should be a key beneficiary.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML.AS / ASML US

  Core coverage name

  Strengths

  ASML is the sole supplier of EUV tools, and its lithography market-share outlook is expected to exceed the 80% to 89% range seen over the past decade. The 2027 High-NA ramp, rising EUV penetration in DRAM, and the storage upcycle all provide medium- to long-term support.

  Weaknesses

  Because customer order starts in 2026 were relatively late, the EUV tool supply chain could not ramp as quickly as hoped, so short-term growth may be less obvious than in 2027.

  Comparison

  Since September 2025, ASML has underperformed Applied Materials and Lam Research by about 100 to 125 basis points and underperformed KLA by more than 15 points, moving from historically high relative premium to a current discount versus U.S. peers.

  Risks

  Export controls on key regions including China, economic slowdown, EUV adoption below expectations, and further interest-rate increases could all pressure earnings forecasts, valuation multiples, and achievement of the target price.

• Applied Materials / Lam Research / KLA

  U.S. semiconductor equipment valuation reference group

  Strengths

  U.S. peers trade at relatively high premium versus historical peaks and receive strong attention from U.S. and Asian investors.

  Weaknesses

  The report does not go into detailed fundamentals for each company and treats them mainly as relative performance and valuation peers to ASML.

  Comparison

  ASML is currently trading at about an 11% discount to this U.S. peer basket, versus an historical average premium of around 84%.

  Risks

  If ASML does not show clearly stronger 2027 growth, the relative valuation discount may remain difficult to repair.

Key data

• 2Q26 Revenue Forecast€8.7bnUp 13.1% year-over-year, down 0.8% sequentially, and 1.4% below consensus, at the midpoint of the company guidance range of €8.4bn to €9.0bn.
• 2Q26 Gross Margin Forecast51.7%Company guidance is 51% to 52%; market consensus is 52%.
• 2Q26 EPS Forecast€6.67/share2.3% below market consensus.
• FY26 Revenue Growth Guidance Midpoint16.3% YoY / €38bnBloomberg consensus is 19.8% YoY, above the company’s guidance midpoint but still within the guidance range.
• JPMorgan 2027/2028 EPS Forecast€54.4 / €64.4Both are above market expectations by 26.5% and 23.8%, respectively.
• Target-price Implied Valuation29.4x 2028 EPSThe target price of €1,900 or $2,200 implies 29.4 times JPMorgan’s 2028 EPS forecast.
• Historical Forward P/E Range28x-38xThe interquartile forward multiple range over the past five years, with an average of about 33 times.
• Rating HistoryOWJPMorgan’s historical rating table shows ASML and ADR maintained a 2028 Overweight rating during the display period.

Impact & implications

The report’s investment implication is that whether ASML can re-earn a premium depends on whether it can prove that post-2027 growth can outperform U.S. semiconductor equipment peers. If 2027 EUV shipments reach 90 to 100 units, immersion demand remains strong, and expansion plans after 2028 are clear, valuation discount repair becomes more likely; otherwise, if the company only delivers near-term results slightly below consensus without forward guidance, the stock may remain constrained by relative underperformance versus peers.

Risks

• Export restrictions on tools for key regions including China could affect ASML orders and shipments.
• A macroeconomic downturn could weaken customer capex, thereby impacting earnings forecasts and the target price.
• EUV adoption below expectations, especially slower-than-expected progression in DRAM, could force estimate revisions.
• Further increases in interest rates could compress acceptable valuation multiples, putting downward pressure on the target price.
• If signals for 2027 EUV shipments, immersion demand, and capacity plans after 2028 are not strong enough, the stock may fail to escape relative peer underperformance.

What to watch

• ASML’s commentary on 2027 growth at the July 15 earnings call.
• Whether 2027 EUV shipments approach or exceed 90 units, especially the probability of the 90-to-100 range.
• Whether demand for immersion lithography equipment remains strong.
• Whether the company provides clear expansion plans for additional capacity after 2028.
• Whether FY26 revenue guidance is raised due to stronger DUV shipments.
• Whether DRAM prices and the storage capex cycle continue to improve.