ASML Shares Approach Record Highs Ahead of Earnings Report

ASML USN070592100

ASML Holding NV, the Dutch semiconductor equipment giant, is trading near its 52-week peak as investors anticipate its upcoming quarterly results. The stock’s sustained upward trajectory in January 2026 reflects its status as Europe’s most valuable technology firm, yet also raises the stakes for the company to deliver on towering market expectations.

A significant catalyst for the recent rally emerged from Taiwan on January 15. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, announced plans to dramatically boost its capital expenditure for 2026 to a range of $52 to $56 billion. This represents a substantial 32% increase over the prior year.

Market observers note that ASML stands to benefit directly from this move, as TSMC intends to allocate up to 80% of this budget to advanced process technologies, defined as 7-nanometer nodes and smaller. ASML holds a monopoly on the extreme ultraviolet (EUV) lithography machines essential for manufacturing at these scales. Furthermore, the memory chip segment provides additional momentum. Analysts at UBS project that ASML’s revenue from DRAM chips could surge by approximately 40%, driven by robust demand for high-bandwidth memory.

Wall Street Analysts Raise Targets

In the days leading up to Wednesday’s earnings release, several major financial institutions have revised their price targets upward, reflecting heightened confidence.

• Morgan Stanley has identified ASML as its top pick within the European semiconductor sector, assigning a price target of €1,400. Its research suggests the company’s earnings per share could nearly double by 2027.
• JPMorgan set a target of $1,518, anticipating fourth-quarter new orders of around €7 billion, a figure that would exceed consensus estimates.
• UBS analysts have published profit forecasts for 2026 and 2027 that sit roughly 25% above the current market average.

With shares currently trading near $1,410, the equity is priced at its yearly high, indicating that much of this optimism is already factored into its valuation.

The Persistent Overhang of China Exposure

Despite the prevailing euphoria, a considerable risk factor remains: the company’s significant reliance on the Chinese market. In the third quarter of 2025, China accounted for a notable 42% of ASML’s total sales. This revenue stream is expected to face pressure in 2026 due to ongoing export restrictions and the gradual advancement of domestic Chinese technology.

This dynamic highlights a key discrepancy. While external analysts paint aggressive growth scenarios, ASML’s own management has maintained a conservative stance, previously indicating only that 2026 revenue would not fall below 2025 levels. Should Wednesday’s guidance reaffirm this caution, the stock’s rich valuation—it trades at a price-to-sales ratio above 13—could trigger a “sell-the-news” reaction among investors.

Key Focus for the Earnings Release

The report scheduled for January 28 will reveal whether the company’s fundamentals justify its premium valuation. Consensus estimates point to revenue between €9.2 and €9.8 billion, with earnings per share around $9.01. However, the primary driver for the stock’s subsequent movement will likely be management’s forward-looking commentary for the current fiscal year, rather than the historical fourth-quarter performance. The central question for markets is whether executives share the same degree of optimism currently displayed on Wall Street.