ASML’s Record Run and €12 Billion Buyback: A Tale of Two Tailwinds

ASML becomes Europe's most valuable company with $674B market cap, driven by €12B buyback, analyst upgrades, and strong Q1 revenue of €8.8B.

The Dutch chip-equipment juggernaut ASML has carved out a unique place in market history this week, becoming the most valuable European company ever with a market capitalisation of roughly $674 billion. That milestone unseats Novo Nordisk’s June 2024 record, and the gap is widening: the Danish drugmaker has shed 43% of its value over the same period. Yet the real story behind ASML’s rally is the interplay of a structural demand wave and a carefully orchestrated capital-return programme.

A Buyback That Keeps on Buying

Alongside the price action, ASML is executing a €12 billion share repurchase plan for the years 2026 to 2028. In the first quarter alone it spent about €1.1 billion buying back its own stock, and the bulk of those shares will be cancelled. That progressively reduces the share count, providing an automatic earnings-per-share tailwind. The programme is running in the background of a stock that has already climbed roughly 50% since the start of the year, touching a 52-week high of €1,498.80 before closing Wednesday at €1,487.40. The secondary article notes that the RSI stands at 68 – technically not overbought, but edging closer.

Wall Street Revises Targets Higher

Analysts are scrambling to keep pace. JPMorgan raised its price target on ASML to $2,200 from $1,813 in early June, reiterating an “Overweight” rating. Morgan Stanley followed with an upgrade to €1,660 from €1,400. Of the 38 analysts polled by Investing.com, only one recommends selling; the rest are either “Strong Buy” or “Buy.” UBS had already designated ASML a top pick the previous month, lifting its estimates. Morningstar’s Javier Correonero goes further, projecting potential annual revenue of €60 billion by the end of the decade.

Institutional Shifts: Doubling Down and Scaling Back

The first quarter revealed a sharp divergence among big money managers. FMR LLC nearly doubled its stake, adding about 1.6 million shares. That aggressive accumulation stood in contrast to Capital International Investors, which cut its position by 48% – selling roughly 1.6 million shares worth about $2.1 billion. Overall, the number of hedge funds holding ASML swelled to 133 from 101 in the previous quarter. According to primary article data, 1,087 funds increased their stakes while 918 reduced them, indicating net bullish institutional sentiment.

Financials Provide the Foundation

The valuation is not without support. ASML reported first-quarter 2026 revenue of €8.767 billion (secondary rounds to €8.8 billion) with a gross margin of 53% and an operating profit of €3.158 billion. Net income came in at €2.8 billion. Management has lifted its full-year revenue forecast to a range of €36 billion to €40 billion. CEO Christophe Fouquet noted that customers are accelerating their capacity plans for 2026 and beyond, as chip demand continues to outstrip supply – particularly for the high-end EUV lithography systems that ASML alone can produce.

The One Cloud on the Horizon

The most concrete risk remains China’s export controls on rare earths. These materials are critical for ASML’s high-precision optics and powerful magnets. Any supply disruptions could delay production and shave billions off annual revenue. Fouquet acknowledged that the wide guidance range already factors in various scenarios from ongoing export-control negotiations. The next quarterly results, due in July, will offer a clearer view of how quickly the company is ramping deliveries of its most expensive and capable machines – the High-NA EUV systems.