Bernstein maintains ASML Outperform, viewing the soft Q2 as not changing the 2027 €45+ EPS base case

Overview

This is a Bernstein commentary on ASML Holding NV’s 2026 Q1 results. The core view is that while Q2 revenue and margin guidance looked softer and pushed ASML shares down about 4%, this appears to be a short-term headwind rather than fundamental deterioration. Q1 revenue, margins, and EPS were all better than expected, management raised FY26 revenue guidance, and stronger signals were signaled for 2027 growth in EUV capacity, DUV demand, and Installed Base Management.

Core views

Bernstein believes the market should look through the soft Q2 and focus on a stronger outlook for 2H26 and 2027. Key drivers include: low-NA EUV capacity is expected to rise to at least 80 units by 2027; the EUV new-product roadmap points to higher throughput and higher ASP; DUV is expected to continue growing as a complementary driver with EUV for capacity additions by advanced logic and DRAM customers; progress on high-NA EUV adoption is on track; and AI demand is increasing lithography intensity for advanced logic and DRAM. The report therefore raised 2027 and 2028 revenue and EPS forecasts and kept ASML as a top-rated stock.

Analysis framework

The report evaluates ASML’s future earnings by combining Q1 actual performance, Q2/FY26 management guidance, EUV/DUV capacity planning, product throughput roadmap, regional and end-use demand mix, consensus expectations, and valuation multiples. For valuation, it derives the target price from forward EPS and target P/E, while expressing the target separately for ASML’s European and U.S. listings.

Methodology notes

• Valuation methodsP/E multiple valuation

  P/E valuation

  The report reduced target P/E from 40x to 35x and applied it to the updated medium-term EPS estimate, keeping the ASML.NA target at EUR 1,700; the U.S. target was converted to USD 1,971 by the stated FX rate.

• earnings_analysisearnings review and guidance bridge

  earnings and guidance decomposition

  It compares Q1 actual revenue, gross margin, operating margin, and EPS versus consensus and company guidance, then analyzes the changes in Q2 and FY26 guidance to judge short-term pressure versus the medium-term trend.

• industry_modelEUV/DUV shipment and ASP model

  EUV and DUV shipment, ASP and throughput model

  The report updates the EUV, DUV and full ASML model based on low-NA EUV capacity growth, product-generation transitions, throughput improvements, and the complementarity between EUV and DUV.

Asset mapping & comparison

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

• ASML Holding NV

  Core coverage name

  Strengths

  Leading EUV technology, rising low-NA EUV capacity, advancing high-NA EUV adoption, strong complementary demand between DUV and EUV, and high-margin Installed Base upgrade business.

  Weaknesses

  Q2 revenue and margin guidance is weak, some high-margin upgrade business in Q1 may not be sustainable, and higher EUV and immersion throughput may drive additional workforce and training costs.

  Comparison

  Bernstein expects ASML’s revenue and EPS to be above consensus over the next five years and believes both systems sales and Installed Base Management will continue to outperform market expectations.

  Risks

  Lower-than-expected gross margin, China demand and export control uncertainty, weakening WFE market, slower technology migration, and long-term threat from substitute technologies.

• EUV business

  Primary growth driver

  Strengths

  At least 80 units of low-NA EUV capacity by 2027, throughput improvements driving ASP higher, and strong demand from advanced logic and DRAM.

  Weaknesses

  Execution risk in capacity ramp and new-product generation transitions, with potential delivery pacing and cost issues affecting margins.

  Comparison

  Bernstein expects EUV revenue to grow 46% year-on-year in 2027, clearly above conservative market expectations.

  Risks

  Customer capex delays, slower clean-room build-out pace, and high-NA EUV adoption progressing slower than expected.

• DUV business

  Supplemental growth driver that grows alongside EUV

  Strengths

  Advanced logic and DRAM customers need DUV as a complement to EUV, and non-China DUV revenue is expected to grow strongly in 2026.

  Weaknesses

  China revenue remains low and is affected by export controls; regional demand mix is volatile.

  Comparison

  Even under an assumption that China revenue stays low for the next two years, the report still expects DUV revenue growth of 17% in 2027.

  Risks

  China demand remains weak or export controls tighten further; non-China customer capex cycles could lag expectations.

Key data

• Q1 2026 revenueEUR 8.8bnSlightly above the consensus and Bernstein’s EUR 8.7bn view, mainly driven by stronger-than-expected Installed Base business.
• Q1 2026 gross margin53%At the high end of company guidance and about 52% versus market expectations.
• Q1 2026 operating margin36.0%Above consensus 34.6%, supported by Advanced Services and Installed Base businesses.
• Q1 2026 EPSEUR 7.15About 8% above market expectations.
• Q2 2026 revenue guidanceEUR 8.4-9.0bnMidpoint below both consensus of around EUR 9.1bn and Bernstein’s prior estimate of around EUR 9.5bn.
• FY26 revenue guidanceEUR 36-40bnThe company raised guidance from EUR 34-39bn, with a midpoint of EUR 38bn broadly in line with consensus.
• FY2027 revenue forecastEUR 50.1bnRaised by about 7.3% from EUR 46.7bn by Bernstein.
• FY2027 EPS forecastaround EUR 47Previously around EUR 42.6; the report says 45+ EUR EPS has become the base case.
• Low-NA EUV shipment assumption2026E around 60 units, 2027E at least 80 unitsConsistent with management’s communicated capacity expansion.
• Target priceASML.NA EUR 1,700; ASML USD 1,971European target unchanged, U.S. target is converted by FX.

Impact & implications

The report’s implication for ASML is constructive: the weak Q2 guidance may affect short-term sentiment, but the medium-term earnings foundation has been revised upward. If EUV capacity, throughput, and ASP gains materialize and DUV grows in line with DRAM and advanced logic capex expansion, ASML’s revenue and EPS could remain above consensus through 2027-2030. On valuation, even though the target P/E was reduced to 35x, higher EPS estimates still support keeping the target price unchanged.

Risks

• Weak Q2 revenue and margin guidance could continue to pressure near-term stock performance.
• Gross margin may fall below model assumptions if the commercialization and rollout costs of EUV and next-generation EUV are higher than expected.
• Chinese customer demand and export controls remain uncertain; further tightening could affect DUV and systems sales.
• If the WFE market is weaker than expected, it will affect semiconductor equipment orders and shipments.
• If advanced-node migration slows, momentum for EUV and DUV growth would weaken.
• In the long term, alternative technology routes could pose substitution risk to ASML lithography demand.

What to watch

• Whether Q2 2026 actual revenue, gross margin, and operating margin validate that the weaker guidance is only a short-term overhang.
• The ramp pace of EUV and DUV shipments in 2H26, and progress on customer clean-room completion and move rate improvement.
• Whether low-NA EUV capacity reaches at least 80 units smoothly in 2027.
• How much throughput and ASP are realized from the EUV road map updates such as NXE:3800F, 4200G, and 4200H.
• The AI-linked expansion intensity of DRAM and advanced logic customers.
• Whether the China revenue share remains around a low 20% level or rebounds if import restrictions ease.
• Whether Installed Base Management upgrade business continues to deliver high-margin contribution.