Market Underestimates ASML Earnings Potential, JPMorgan Maintains Overweight

Overview

This report is JPMorgan’s earnings commentary and valuation update on ASML. The core view is that the market remains focused on the 2027 EUV unit count and capacity constraints, while overlooking ASP upgrades from high-end EUV model transitions, potential DUV sales expansion, growth in the existing customer base management business, and the support from a strengthening DRAM cycle. Based on these factors, the firm maintains its overweight/buy rating on ASML.

Core views

The report argues that ASML’s earnings potential is undervalued. First, 2027 EUV delivery capacity should not be seen as a ceiling, but rather a floor, and higher mix of 3800E/3800F machines is expected to raise unit pricing. Second, DUV is not a peripheral business; in the context of capacity expansion among both China and non-China customers, DUV revenue may materially exceed market expectations. Third, the existing customer base management business is still delivering stable growth. Fourth, as the exclusive supplier of EUV, ASML has a quasi-monopoly position in lithography and should earn a valuation premium relative to U.S. semiconductor equipment peers.

Analysis framework

The report applies a bottom-up segment-level revenue and earnings forecasting framework, separately assessing EUV shipments, EUV ASP, DUV shipments and ASP, and growth in the existing customer base management business, and maps updated FY2026-FY2028 revenue, gross margin, EBIT, and EPS forecasts to its target price. Valuation is based on FY2028 EPS at roughly 29.4x forward P/E and is compared with ASML’s five-year valuation range as well as U.S. peers such as Applied Materials, KLA, and Lam Research.

Methodology notes

• Valuation methodsPrice-to-earnings valuation method

  The target price is based on FY2028 EPS and an approximate 29.4x P/E multiple.

  The report states that ASML’s five-year forward P/E interquartile range is about 28-39x, with an average near 33.2x; 29.4x is at the lower end of the historical range and is used to reflect a stronger upside-cycle earnings estimate.

• Operating forecastBottom-up segment revenue model

  Break out EUV, DUV, and existing customer base management.

  The report separately estimates EUV shipments and ASP, DUV shipments and ASP, and existing customer base management growth to assess whether the market is underestimating ASML’s revenue and EPS.

• Relative valuationPeer comparison

  Compare with U.S. semiconductor equipment peers such as Lam Research, KLA, and Applied Materials.

  The report argues that ASML’s current valuation is no longer clearly at a premium versus peers, but given its monopoly position as the sole EUV supplier, it should in principle command some valuation premium.

Asset mapping & comparison

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

• ASML HOLDING NV / US.ASML

  Core coverage name

  Strengths

  Sole EUV supplier, high lithography market share, beneficiary of AI infrastructure, upcycle in DRAM, high-NA transition, and rising EUV penetration in DRAM.

  Weaknesses

  Market concern over 2027 EUV capacity constraints; the company no longer discloses order data, which may temporarily weaken market visibility on demand.

  Comparison

  The report argues ASML’s current valuation is not expensive relative to Lam Research, KLA, and Applied Materials, and given its monopoly position it should command a premium.

  Risks

  Export restrictions, macroeconomic slowdown, lower-than-expected EUV adoption, and rising interest rates may pressure earnings estimates and valuation multiples.

Key data

• RatingOverweight/BuyThe report maintains ASML’s overweight rating.
• Target price€1,515; ASML ADR is $1,813Target price corresponds to FY2028 EPS and an approximate 29.4x P/E.
• Current price€1,233.20; ASML ADR is $1,518.30These correspond to the European share price on April 15, 2026 and ADR price on April 14, 2026.
• FY2026/FY2027/FY2028 revenue forecast revision+6% / +5% / +8%Mainly from higher EUV low-NA shipments, ramp-up of higher-throughput tools, and upward revisions to DUV expectations.
• FY2026/FY2027/FY2028 EPS forecast revision+9% / +7% / +11%Earnings revisions are driven by higher revenue plus improved operating leverage.
• Potential EUV shipments in 202780-85 unitsThe report views 80 units as near the minimum, and at 85 units plus ASP upgrades, revenue could be more than 30% above market expectations.
• EUV ASP upside potential15%-20%From a mix shift toward 3800E or 3800F systems.
• 2027 DUV revenue scenario€25.8 billionAssuming 600 units sold at an ASP of €43 million, this is about 85% above the market expectation of €14 billion.
• Existing customer base management business revenue scenarioabout €11 billion in 2027If 2026 growth is 22% and 2027 growth is 10%, this business could be about 4% above market expectations.

Impact & implications

If JPMorgan’s thesis is correct, ASML’s earnings uplift would come mainly from segment-level revenue elasticity that is not yet fully priced by the market, rather than simply from EUV unit growth. EUV ASP expansion, DUV demand growth, and customer base business growth together improve EPS visibility for FY2026-FY2028, potentially supporting a valuation recovery versus U.S. semiconductor equipment peers and underpinning the overweight rating and target price.

Risks

• Export restrictions on key regions including China could affect revenue and orders.
• An economic downturn could weaken semiconductor capex and thus impair earnings forecasts and target price.
• If EUV adoption is slower than expected, revenue and profit forecasts may move lower.
• Persistently rising interest rates could compress valuation multiples and thus affect the target price.
• The company’s cessation of public order disclosures may create temporary uncertainty about demand and capacity interpretation.

What to watch

• Whether Q2 2026 revenue approaches the company’s guided €8.7 billion and gross margin remains around 51.5%.
• Whether full-year 2026 revenue lands near the company’s guided range of €36 billion to €40 billion.
• Execution progress of a delivery plan of at least 60 low-NA EUV systems in 2026 and 80 in 2027.
• Delivery pace of high-throughput EUV systems such as 3800E/3800F and the scale of ASP uplift.
• Demand intensity and actual shipments of DUV equipment among both China and non-China customers.
• Whether growth in the existing customer base management business continues the roughly €2.5 billion Q1 2025 trajectory.
• Whether the DRAM price and memory capex cycle continue to improve.