ASML's Two-Sided Coin: Wall Street's Conviction Meets a Market Still Catching Its Breath

ASML shares trade below 50-day average, but Goldman and Bernstein see upside on strong demand, margin expansion, and raised 2026 guidance.

The Dutch lithography giant finds itself in an unusual position this week: two of the most influential names in equity research have just thrown their weight behind the stock, yet the share price continues to trade below its recent momentum. It's a disconnect that sums up the current ASML narrative — one where long-term fundamentals and short-term sentiment are pulling in opposite directions.

At last check, ASML shares were changing hands at €1,426.00, up a modest 0.35 percent on the day. That leaves the stock roughly 7.24 percent beneath its 50-day moving average — a technical reminder that the recent consolidation phase hasn't fully run its course, even as the fundamental picture brightens considerably.

Goldman and Bernstein Double Down

Goldman Sachs has added ASML to its European Conviction List, with analyst Alex Duval pointing to earnings estimates running 5 to 18 percent above consensus for the 2027 through 2029 fiscal years. Crucially, Duval's thesis extends beyond the artificial intelligence data-center buildout that has dominated semiconductor narratives. He explicitly cites demand from logic chips, DRAM memory, mobile, automotive, and industrial end-markets as co-drivers of the growth story. Goldman also models a significant margin expansion, forecasting gross margin climbing from roughly 41 percent this year to around 50 percent by 2029. The bank flags export controls, customer capex cyclicality, and operational execution risks as the key watch items.

Bernstein goes a step further. The firm rates ASML "Outperform" with a €2,500 price target, built on rising lithography intensity across chip production. Memory makers are expected to see lithography's share of costs jump from 20 percent to nearly 30 percent, while logic chips could push past 30 percent. EUV machine pricing has already risen 20 percent over two years, which Bernstein believes could drive margins toward the mid-60s over the medium term. Management has signaled that manufacturing capacity is fully booked through the end of 2027, leaving room for further price increases. Bernstein also highlights that China's share of ASML revenue has fallen to 16 percent in the first half of 2026 — a data point that undercuts the narrative of excessive Chinese dependence.

Guidance Raised, Margins Strengthened

The company itself has been busy reshaping expectations. ASML has lifted its 2026 revenue forecast to €43–45 billion, a substantial jump from the previously communicated range of €36–40 billion. Second-quarter results showed net sales of €9.3 billion and net income of €2.9 billion, with gross margin coming in at 54–56 percent — ahead of the 51–53 percent the company had earlier projected.

CFO Roger Dassen has been explicit about the company's pricing power, pressing Taiwanese customers like TSMC for roughly 10 percent price increases on DUV lithography systems. TSMC has so far responded cautiously, but ASML is simultaneously expanding EUV and DUV production capacity by around 30 percent over the next two years. EUV capacity, the company says, is already sold out through end-2027.

The China Question: Real but Nuanced

The most persistent overhang remains China. The country's share of ASML revenue has slid from 36 percent in the fourth quarter to roughly 19–20 percent in recent reporting periods, driven largely by US export controls. A Shanghai-based consortium has begun mass production of its own DUV lithography machines for the 28-nanometer process — around five units planned for 2026 and 20 for 2027. Those numbers look modest against the roughly 130 DUV systems ASML alone expects to ship in 2026, and analysts note the Chinese tools trail by roughly four technology generations and haven't achieved yield parity.

The export-control saga gained fresh drama when the US Commerce Department suggested an EUV machine may have reached China improperly. CEO Christophe Fouquet flatly denied this, insisting every machine is tracked and none are in China. Washington is now weighing legislation that would ban all DUV shipments to China — a move that could further compress the already-shrinking Chinese revenue contribution.

Buybacks, Institutional Buying, and a New Frontier

Operationally, ASML continues to return capital to shareholders. Between July 27 and 31, the company repurchased roughly 51,400 to just under 56,800 shares daily at weighted average prices between €1,375.23 and €1,525.34, with daily consideration of about €78 million under the buyback program announced in January.

Institutional conviction appears to be building alongside. Recent filings show institutional investors hold just over 26 percent of ASML shares. Fisher Asset Management increased its stake by 3.0 percent in the first quarter, VectorGlobal IAG established a new position of roughly 9,400 shares — making ASML its eighth-largest holding — and Militia Capital Management bought in with a position worth about $756,000. Arrowstreet Capital, Price T. Rowe, and Dimensional Fund Advisors also added to their positions.

Beyond the balance sheet, ASML is planting flags in new territory. The company has signed a preliminary agreement with Tata Electronics to build 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 a stock award worth €20,000, vesting in 2030 — a signal of management's confidence in the long-term trajectory.

A Fair Value Debate

Independent analysis from Simply Wall St puts ASML's fair value at €1,551, with a Hold rating assigned when the stock traded at €1,434.20 in early August. Their scenarios span a bear case of €950, a base case of €1,600, and a bull case of €2,100 on a twelve-month view. The average analyst price target sits at €1,995. Notable investors are taking sides too: Coatue's Philippe Laffont says he has trimmed cloud positions to add semiconductor infrastructure exposure, citing ASML's effective EUV monopoly and High-NA technology as future growth drivers.

The stock is up 56.55 percent year-to-date despite a monthly decline of 11.50 percent, reflecting the tension between China-related anxiety and the broader strength of the franchise. For now, the market seems caught between a fully booked order book and a geopolitical overhang — with the bulls betting that pricing power and capacity scarcity will ultimately win the argument.