ASML's €12 Billion Buyback and EUV Capacity Debate Drive Divergent Institutional Reaction

ASML hits record high becoming Europe's most valuable firm; JPMorgan and Morgan Stanley raise price targets on EUV output flexibility, while institutional investors show divergent bets.

A tug-of-war is playing out among institutional investors in ASML Holding. While the Dutch chip-equipment titan’s stock has surged more than 50% year-to-date and analysts from JPMorgan and Morgan Stanley have lifted their price targets, the positioning data from the first quarter reveals a sharp split. FMR LLC nearly doubled its stake, snapping up roughly 1.6 million shares, while Capital International Investors shed an almost identical number — a 48% reduction worth around $2.1 billion. Meanwhile, the number of hedge funds holding ASML rose to 133 from 101, and 1,087 funds added to their positions against 918 that cut back.

The divergent bets come as ASML’s share price touched a 52-week high of €1,498.80 this week, closing at €1,487.40 and pushing its market capitalization to roughly $674 billion — overtaking Novo Nordisk’s previous record as the most valuable European company in history. Yet on Thursday the stock eased 2.12% to €1,455.80, still up 47.30% since the start of the year and more than double its level a year ago.

Analyst Upgrades Hinge on Production Flexibility

The bullish case rests on ASML’s ability to stretch its low-NA EUV lithography output beyond what the market has priced in. JPMorgan raised its price target to €1,900 from €1,515 on June 3, while simultaneously lifting the dollar-denominated target to $2,200 from $1,813. Both banks maintained “Overweight” ratings. The key insight, according to analyst Sandeep Deshpande, is that ASML can deliver more than 110 low-NA EUV systems without adding new building capacity — well above the 90 systems that investors had previously treated as a ceiling. The bank’s base-case model starts with 90 units but flags further upward revisions.

Morgan Stanley followed suit, increasing its target to €1,660 from €1,400, underpinned by a 32-times price-to-earnings multiple on expected earnings per share of €51.92 for 2028. The bank forecasts 29% annual EPS expansion from 2026 through 2028, betting that ASML will ride the artificial-intelligence infrastructure wave for years. The chipmaker’s expansion plans on the Brainport Industries Campus in Eindhoven, set to break ground in the third quarter of 2026, are seen as just the first stage.

Buyback Program Adds a Steady Tailwind

Running in the background of the analyst upgrades is a share repurchase program that stretches to 2028 and totals up to €12 billion. In the first three months of 2026 alone, ASML bought back roughly €1.1 billion of its own stock, with the vast majority destined for cancellation. The buyback underpins earnings per share mechanically, even as the operational narrative shifts toward capacity expansion.

Management’s revenue guidance for 2026 was raised to €36–40 billion, and the first-quarter numbers offered concrete support: revenue of €8.767 billion, a gross margin of 53%, and operating profit of €3.158 billion. Of the 38 analysts tracked by Investing.com, only one recommends selling the stock; the rest are at “Strong Buy” or equivalent.

China Risks Weigh on the Regional Mix

The most visible risk remains export controls. China’s share of ASML’s revenue collapsed to 19% in the first quarter from 36% in the prior quarter, reflecting tightened trade restrictions that also ripple into service revenue. The MATCH Act under discussion in the US Congress could further complicate maintenance and upgrades for the already installed base in China. Separately, Chinese restrictions on rare earth exports threaten ASML’s supply chain for high-precision optics and magnets, which CEO Christophe Fouquet acknowledged by noting that the 2026 revenue range incorporates scenarios from ongoing export-control negotiations.

Technical Levels and the Next Catalyst

The stock now trades 14.30% above its 50-day moving average, signaling that much of the recent optimism is already reflected in the price. The next major checkpoint arrives on July 15, 2026, when quarterly earnings will either validate the capacity-flexibility thesis or expose operational bottlenecks, especially in the ramp-up of next-generation high-NA EUV machines — the most expensive and powerful systems in ASML’s portfolio. Until then, the clash between deep-pocketed buyers and sellers will keep the story as much about ownership dynamics as about lithography hardware.