ASML's Order Books Are Full Through 2027 — Yet the Stock Still Can't Escape the China Question

ASML shares recover but remain below record highs as strong demand clashes with China competition and US export pressure.

The Dutch lithography giant finds itself in an unusual position: demand is so strong that its manufacturing capacity is spoken for nearly two years out, and Wall Street is lining up to back the stock. And yet, the share price remains caught in a tug-of-war between that bullish momentum and a political storm that refuses to fade.

ASML's shares climbed 3.78 percent on Tuesday to EUR 1,483.20, extending a weekly gain of 9.61 percent. The recovery has been steady but incomplete — the stock still sits 15.15 percent below its June record high of EUR 1,748. In U.S. trading the same day, the ADR jumped 4.2 percent to $1,711.89, following a close of $1,642.52 the prior session. German-listed shares were down 1.09 percent at EUR 1,467.00 on Wednesday, leaving a 30-day decline of 8.11 percent on the board.

That residual weakness is a hangover from July, when the entire semiconductor complex took a beating. The Philadelphia Semiconductor Index suffered its worst monthly loss since 2008, falling more than 20 percent, while chip-focused ETFs still drew record inflows of roughly $6 billion. ASML itself shed around 18 percent of its value last month, caught between concerns about Chinese chip ambitions and a broad sector-wide sell-off.

A Shanghai Rival Emerges — But the Threat Looks Manageable

The latest source of anxiety came at the end of July, when a state-backed company in Shanghai announced it had begun small-series production of immersion DUV lithography machines — the first credible domestic alternative to ASML's systems in China's home market. The news initially weighed on the stock, with the Shanghai firm planning to deliver around five systems in 2026 and roughly 20 in 2027 to customers including SMIC and CXMT, targeting 28-nanometer chips.

Analysts, however, are largely unimpressed. Bernstein notes that China accounted for just 16 percent of ASML's revenue in the first half of 2026, or about EUR 2.9 billion over six months — a sharp drop from the 36 percent share of net system sales China represented in the fourth quarter of 2025. CFO Roger Dassen expects China to settle at around 20 percent of revenue for the full year as second-half demand picks up. The investment bank also characterizes the Chinese technology as years behind ASML's capabilities, a view echoed by industry experts who point out that DUV multi-patterning requires significantly more process steps and higher costs than EUV lithography.

ASML CEO Christophe Fouquet has pushed back on the notion that the technology gap is closing, citing an internal firewall designed to prevent reverse-engineering and a technological lead measured in decades. The company employs more than 1,500 people in China, underscoring how deeply intertwined it remains with the market despite export restrictions.

Washington Turns Up the Pressure

The political dimension is not fading. U.S. Commerce Secretary Howard Lutnick has accused ASML of shipping advanced lithography equipment to China — specifically EUV machines, whose export has been banned since the first Trump administration's controls. Fouquet rejects the allegations outright. Meanwhile, the U.S. government is investing in competitor xLight, and Congress is weighing legislation that would also prohibit the sale and maintenance of older DUV systems in China.

Samsung and SK Hynix, for their part, have spent roughly two years testing Chinese etching equipment from AMEC as a hedge against potential further U.S. export controls — a move analysts read more as precautionary diversification than a genuine pivot away from Western suppliers.

The Real Story: A Booked-Out Order Pipeline

The actual driver of the current rally is not the China news at all — it's the order book. Goldman Sachs added ASML to its Conviction List after management signaled that manufacturing capacity is fully booked through the end of 2027. Bernstein followed suit, placing ASML on its European Conviction List with an Outperform rating and a price target of EUR 2,500, citing strong orders from logic and DRAM chipmakers that provide better visibility into future growth.

The supply chain is reinforcing that confidence. Zeiss, the key optics supplier, is expanding its Oberkochen facility by roughly 25,000 square meters of production space, with the first employees moving in this month — four years after the 2022 groundbreaking. Oberkochen and Wetzlar remain the only locations worldwide capable of producing the optical columns for ASML scanners. According to ASML's annual report, Zeiss capacity alone limits how many systems the company can build. In the low-NA EUV segment, ASML is nearly sold out for 2027, with capacity rising about 30 percent from the current roughly 65 systems — and a further increase for 2028 is already under consideration.

Strong Numbers, a Raised Outlook, and a Dividend

The fundamentals support the optimism. Second-quarter revenue rose 21.2 percent to EUR 9.33 billion, beating the company's own guidance, with net profit of EUR 2.9 billion. Earnings per share climbed from EUR 5.90 to EUR 7.58. Management raised its full-year 2026 revenue forecast to EUR 43-45 billion — the second upward revision this year — driven by surging demand for AI chips. Intel Foundry has emerged as a customer for the latest High-NA EUV generation, and Taiwan's TSMC reported June revenue up 68 percent year-over-year, a sign of sustained investment in new fabrication capacity.

On Wednesday, ASML paid out the dividend of $2.1507 per share approved in July.

The Margin Question Lingers

Not every signal points one direction. The transition to High-NA EUV technology is inflating R&D costs, and ongoing capacity investments across the supply chain could pressure margins in the near term despite the rising revenue outlook. UBS analysts expect ASML to benefit from ongoing fab expansions but caution about the risks posed by export restrictions.

The valuation debate is also live. The stock trades at a price-to-earnings ratio of roughly 53, well above its five-year average of about 39, even as it sits 3.62 percent below its 50-day moving average of EUR 1,538.98 and 22.71 percent above its 200-day average of EUR 1,208.68.

The consensus rating remains "Moderate Buy" with a price target near $1,970. The market's verdict, for now, is that a fully booked order pipeline and a raised forecast outweigh both the Shanghai challenger and the margin pressure — but the China question keeps the stock's near-term path anything but smooth.