The key breakthrough for ASML lies in capacity guidance for 2027 and beyond, not short-term 2Q26 earnings

Overview

This report is JPMorgan's preview ahead of ASML's 2Q26 earnings release. The report expects 2Q26 revenue, gross margin, and EPS to be slightly below market consensus, but emphasizes that this is not the core determinant of share price performance. The true investment focus is whether management can provide strong signals on EUV deliveries, immersion DUV demand, and long-term capacity for 2027 and beyond. JPMorgan believes that ASML, as the sole EUV supplier, will benefit from the High-NA transition, increased EUV adoption in DRAM, and the memory upcycle, with 2027/2028 earnings potentially significantly above market expectations.

Core views

The core views are: first, a short-term 2Q26 earnings miss versus consensus does not change the medium-term investment thesis; second, ASML's growth in 2027 could significantly exceed WFE growth because customer order timing in 2026 makes it difficult to materially increase EUV shipments; third, if the company signals 2027 shipments of 90 or 90-100 EUV tools, this would be moderately or strongly positive, respectively; fourth, ASML has significantly underperformed Applied Materials, Lam Research, KLA, and other U.S. peers and trades at a valuation discount, so strong guidance for 2027 and beyond could trigger a valuation recovery; fifth, its sole-supplier position in EUV, the High-NA launch, improving DRAM pricing, and a recovery in the memory cycle collectively support the Overweight rating.

Analysis framework

The report combines an earnings preview, comparison with company guidance, consensus estimates, 2027/2028 EPS forecasts, peer valuation comparisons, and scenario-based catalyst analysis. The short-term analysis compares 2Q26 revenue, gross margin, and EPS with company guidance and market consensus; the medium-term analysis focuses on 2027 EUV capacity, DUV demand, High-NA migration, and memory demand; the valuation analysis uses 2028 EPS and P/E multiples and compares them with ASML's historical trading range and U.S. semiconductor equipment peers.

Methodology notes

• earnings_previewQuarterly earnings preview and guidance comparison

  Cross-sectional comparison of JPMorgan's forecasts, company guidance, and market consensus estimates.

  The report expects 2Q26 revenue of €8.7bn, at the midpoint of the company's €8.4bn-€9.0bn guidance range but below consensus; gross margin and EPS are also slightly below consensus, providing a basis for assessing the magnitude of the short-term earnings surprise.

• Valuation methodsForward P/E valuation

  Deriving the price target using 2028 EPS and the target P/E multiple.

  JPMorgan sets a price target of €1,900 for ASML and $2,200 for the ADR, corresponding to 29.4x its 2028 EPS; this multiple is at the lower end of ASML's 28-38x forward P/E range over the past five years.

• peer_comparisonPeer valuation and relative performance comparison

  Comparing ASML's valuation premium/discount and share price performance with U.S. semiconductor equipment peers.

  The report notes that ASML has underperformed Applied Materials and Lam Research by approximately 100-125% since September 2025 and KLA by more than 15%; it currently trades at an approximately 11% discount to the U.S. peer basket, versus a historical average premium of 84%.

Asset mapping & comparison

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

• ASML HOLDING NV

  Core covered company; JPMorgan maintains its Overweight rating.

  Strengths

  Sole supplier of EUV tools; lithography market share is expected to exceed the 80-89% range of the past decade; High-NA launches from 2027; increasing EUV adoption in DRAM; improving demand from the memory upcycle.

  Weaknesses

  Incremental EUV shipments in 2026 are constrained by customer order timing and supply-chain readiness; 2Q26 revenue and EPS are expected below market consensus.

  Comparison

  It has significantly underperformed Applied Materials, Lam Research, and KLA since September 2025, and currently trades at an approximately 11% discount to the U.S. equipment peer basket, below its historical average premium.

  Risks

  Export restrictions in key regions such as China, macroeconomic downturn, lower-than-expected EUV adoption, and continued interest-rate increases weighing on valuation multiples.

• ASML ADR

  ASML's U.S.-traded ADR, also rated Overweight.

  Strengths

  Provides the same exposure to EUV, High-NA, and the memory cycle as ASML's primary listing, with a price target of $2,200.

  Weaknesses

  Affected by the global semiconductor capital expenditure cycle, foreign exchange rates, and U.S. investor risk appetite.

  Comparison

  The report emphasizes that ASML needs participation from U.S. and Asian investors for a re-rating, with the ADR serving as an important instrument for U.S. investors to express ASML exposure.

  Risks

  The same as for ASML's primary listing, including export controls, economic downturn, weaker-than-expected EUV adoption, and rising interest rates.

Key data

• 2Q26 revenue forecast€8,700mDown 0.8% quarter-over-quarter, up 13.1% year-over-year, 1.4% below consensus, and consistent with the midpoint of the company's €8.4bn-€9.0bn guidance.
• 2Q26 gross margin forecast51.7%Company guidance is 51%-52%, versus consensus of 52%.
• 2Q26 EPS forecast€6.67/share2.3% below consensus.
• FY26 revenue growth guidance midpoint16.3% YoY, approximately €38bnBloomberg consensus is 19.8% YoY, still within the company's guidance range.
• JPMorgan 2027/2028 EPS forecast€54.4 / €64.426.5% / 23.8% above market expectations, respectively.
• ASML European listing rating and price targetOverweight; price target €1,900.00Current price €1,618.20, price date 2026-07-06; price target horizon Jun-28.
• ASML ADR rating and price targetOverweight; price target $2,200.00Current price $1,825.07, price date 2026-07-06; price target horizon Jun-28.
• Price target valuation multiple29.4x 2028 EPSBelow or near the lower end of ASML's 28-38x forward P/E range over the past five years; historical average approximately 33x.
• Valuation versus U.S. equipment peersApproximately 11% current discountThe historical average was an approximately 84% premium, and the report believes there is room for a valuation recovery.
• Potential 2027 EUV shipment catalyst90 tools moderately positive, 90-100 tools very positiveThe report views 2027 capacity and shipment guidance as the key variable for a share price breakout.

Impact & implications

If ASML provides stronger-than-expected 2027 EUV shipment, immersion DUV demand, and post-2028 capacity expansion guidance at its 2Q26 release, it could change the market's view of ASML's growth and valuation discount relative to U.S. semiconductor equipment peers and attract U.S. and Asian investors to reallocate. If management only confirms moderate capacity or lacks medium- to long-term expansion signals, the strength of a short-term share price breakout could be limited.

Risks

• Export restrictions on equipment to key regions such as China could suppress revenue and orders.
• An economic downturn could weaken semiconductor capital spending and affect earnings forecasts and achievement of the price target.
• Slower-than-expected EUV adoption would create downside risks for revenue, profits, and valuation.
• Further interest-rate increases could compress valuation multiples and thereby affect the price target.
• If 2027 EUV shipments or post-2028 capacity guidance is not strong enough, the share price may struggle to be re-rated relative to U.S. peers.

What to watch

• Whether actual 2Q26 revenue, gross margin, and EPS are close to JPMorgan's forecasts and the midpoint of company guidance.
• Whether the company raises FY26 guidance, particularly whether DUV shipments are stronger than previously expected.
• Management's comments on the number of EUV tools to be shipped in 2027, especially whether it approaches the 90 or 90-100 range.
• The strength of immersion DUV demand and its contribution to 2027 growth.
• The pace of customer adoption following the High-NA launch in 2027.
• Whether DRAM pricing and the memory capital expenditure cycle continue to improve.
• Whether ASML's valuation discount to U.S. semiconductor equipment peers narrows.