ASML Stock Slips Despite Record Guidance and a Wall of Analyst Upgrades

ASML shares drop 2.5% after stellar Q2 earnings, as market weighs AI-driven demand against China export risks and TSMC's cautious stance on high-NA EUV.

Investors have shrugged off what many analysts consider the strongest quarterly report in ASML’s recent history, sending the shares 2.51% lower on Friday to €1,528.00. The weekly decline of 2.92% stands in sharp contrast to a wave of price-target increases from major banks that range as high as €2,200 from Citi and $2,500 from Wells Fargo. The disconnect highlights a market that is weighing an extended AI-fueled demand cycle against unresolved regulatory threats and concentrated customer risk.

The company delivered net revenue of €9.33 billion in the second quarter, with a gross margin of 54% and diluted earnings per share of €7.59 — all ahead of its own internal forecasts. Management responded by raising the full-year 2026 revenue guidance to a range of €43 billion to €45 billion, up from the prior €36 billion to €40 billion, while lifting the gross-margin target to 54%–56% from 51%–53%. For Citi analyst group, that was enough to boost revenue estimates by 14% to 36% and earnings estimates by 25% to 52% across the coming years, lifting the price target 31% to €2,200. Berenberg, Deutsche Bank and Morgan Stanley followed with targets of €2,100, €2,150 and €1,930 respectively, while DZ Bank made a direct jump from “Hold” to “Strong Buy.”

Underpinning the optimism is the rate at which ASML is expanding production capacity. The company plans to raise its output of low-NA EUV tools by roughly 30% in 2027 compared with the roughly 65 units planned for 2026, and has placed a further 30% expansion for 2028 under evaluation — with the explicit caveat that both steps depend on sustained order intake. Meanwhile, DUV immersion capacity is expected to reach around 130 systems this year, with another 30% increase penciled in for 2027. On the technology frontier, Intel has already transferred selected manufacturing steps for its 18A process to ASML’s new high-NA EUV systems, marking the first high-volume logic qualification for the next-generation lithography tool.

The bull case rests on the breadth of demand signals. AI-driven investment is boosting orders for advanced logic and memory chips, and first-half bookings remained exceptionally strong. Citi, for one, sees the capital-spending cycle in semiconductor equipment as still in its early phase, with visible order coverage that extends into 2028. But the momentum faces two powerful counterweights. China’s share of ASML’s system sales dropped from 36% in the fourth quarter of 2025 to just 19% in the first quarter of 2026, and the proposed MATCH Act in the U.S. Congress threatens to further restrict exports of DUV machines and related services to the country — a market that contributes roughly 20% of this year’s revenue. The Netherlands has already voiced diplomatic opposition.

Adding to the cautious tone, TSMC, the world’s dominant advanced-chip foundry, has publicly stated it will skip high-NA EUV for its first A14 node, with analysts expecting adoption at the earliest around 2029. That leaves a gap between Intel’s early embrace of the technology and the broader commercial rollout that would justify the immense capital expenditures ASML is committing. The stock’s 30-day annualized volatility of 60.59% and a relative strength index of 47.5 point to a market that has not taken a clear directional bet.

Technically, the shares now trade just 1.53% above their 50-day moving average of €1,504.90 — a slim cushion that could be tested if the next batch of order data disappoints. From the June 30 record high of €1,748.00, the stock has shed 12.6%, even as the year-to-date gain still stands at 65.82% and the 12-month return reaches 137.41%. With multiple analyst targets now above €2,000, the gap between the current price and those forecasts suggests the market is demanding proof that the political cloud over China will not turn into a storm, and that the capacity ramp remains backed by firm customer commitments rather than speculative planning. The two definitive catalysts ahead are ASML’s next quarterly order report and the legislative trajectory of the MATCH Act in Washington.