ASML's Contradiction: A Beaten-Down Stock With a Fully Booked Future

ASML shares slide 14% but 2026 EUV capacity is sold out. Goldman adds to conviction list, Bernstein names top pick, as guidance jumps to €43-45B.

The math on ASML looks almost schizophrenic right now. The Dutch lithography giant has seen its shares slide nearly 14 percent over the past month, yet its production capacity for next-generation EUV machines is effectively sold out through the end of 2027. Wall Street is responding to that disconnect by turning more bullish, not less.

Goldman Sachs added ASML to its European Conviction List on Monday, a move that looks contrarian given the stock's recent trajectory. The shares, trading around €1,408, sit roughly 20 percent below the June record high of €1,748. The bank's analysts cite improving visibility into future capacity expansion, with demand holding firm across both logic chips and DRAM memory. Bernstein followed suit, naming ASML one of its "Best Ideas" for the third quarter of 2026.

The Guidance That Changed the Conversation

The optimism isn't unfounded. Management lifted its full-year 2026 revenue forecast to €43-45 billion, a substantial jump from the previously communicated range of €36-40 billion. The second quarter delivered net sales of €9.3 billion and net income of €2.9 billion, with gross margin guidance climbing to 54-56 percent from an earlier 51-53 percent estimate.

That pricing power extends beyond the headline numbers. ASML is pushing Taiwanese customers like TSMC for roughly 10 percent price increases on DUV lithography systems — a request TSMC has so far met with caution. CFO Roger Dassen has leaned into the company's pricing leverage, announcing plans to expand EUV and DUV production capacity by around 30 percent over the next two years.

The shares responded positively in pre-market trading Monday, gaining 1.52 percent to €1,442.60. Year-to-date, the stock remains up 56.55 percent despite the recent turbulence.

The Shanghai Shadow

The selloff has a specific trigger. Late July brought news that a Shanghai-based manufacturer had begun limited series production of its own immersion DUV machines. The market reacted swiftly, fearing gradual market share erosion in a critical region. The numbers suggest that anxiety may be overdone: the Chinese competitor plans just five systems for 2026 and around 20 for 2027 — a fraction of the roughly 130 DUV units ASML alone expects to ship next year.

Institutional investors largely view the short-term financial impact as overstated. Industry analysts note the Chinese tools trail ASML by roughly four technology generations and haven't yet achieved the yield parity that matters most in semiconductor manufacturing. ASML isn't standing still either — the company is expanding its own DUV capacity for 2027 by about 30 percent, a defensive move aimed at preserving its technological lead and scale advantages.

China's share of ASML revenue has already fallen sharply, from 36 percent in the fourth quarter to roughly 19-20 percent in recent reporting periods, driven primarily by US export controls. The political dimension adds further uncertainty: the US Commerce Department has alleged an EUV machine may have reached China improperly, a claim CEO Christophe Fouquet flatly denied, insisting every machine is tracked and none are in China. Congress is now considering legislation that would ban all DUV shipments to China, which could compress that revenue share further.

Beyond the Headlines

For shareholders, the immediate calendar brings a payout. ASML pays an interim dividend of €1.88 per share for fiscal 2026 on Wednesday, August 5, with the ex-dividend date at Euronext having passed on July 27.

The company is also building beyond its traditional markets. A framework agreement with Tata Electronics calls for establishing India's first 300-millimeter semiconductor fab in Dholera, Gujarat — an $11 billion project where ASML will supply lithography solutions and help develop local talent and supply chains. Meanwhile, the company plans to grant each of its roughly 45,000 employees an equity award worth €20,000, vesting in 2030 — a signal of long-term confidence despite the current China-related turbulence.

What the Street Is Saying

Valuation views vary widely. Simply Wall St analysts peg fair value at €1,551 with a Hold rating, while their scenarios range from a bear case of €950 to a bull case of €2,100 over twelve months. The average analyst price target sits at €1,995. Philippe Laffont of Coatue has reportedly rotated out of cloud stocks into semiconductor infrastructure like ASML, citing the company's de facto monopoly in EUV lithography and High-NA EUV technology as future growth drivers.

Technically, the stock's 14-day RSI of 40.9 suggests it's approaching oversold territory. The recovery back to June's high remains elusive, but the year's performance — up roughly 53 percent — tells a different story than the recent slide. For a company whose capacity is booked years in advance and whose guidance keeps climbing, the market's current mood may ultimately prove to be the anomaly.