ASML’s Two-Front Challenge: Deflecting a US Smuggling Probe While Managing an EUV Production Squeeze

ASML shares surge 68% YTD on AI demand, but a US smuggling accusation and production constraints pose risks. Analysts remain bullish with price targets up 40%.

ASML’s breakneck rally has been fuelled by the artificial intelligence boom, but two emerging threats are testing the narrative: a US smuggling accusation and the company’s own warning about production constraints. The Dutch lithography giant closed at €1,661.20 on Friday, up 68% year-to-date and within striking distance of its 52-week high of €1,691, set on 18 June. At that level, the stock trades 21% above its 50-day moving average.

The US Commerce Secretary Howard Lutnick recently confronted ASML’s management with concerns that one of its advanced EUV lithography systems may have ended up in China despite strict sanctions. The company issued a forceful denial, stating it has never delivered an EUV machine to China, nor sent special components or modules for those systems. Secret export is considered extremely unlikely given the sheer size of EUV tools, their low production volumes, and the fact that every machine requires round-the-clock maintenance by ASML staff, making location tracking foolproof.

That geopolitical ripple barely dented the share price – a 1.5% slip on Friday – but the stock’s trajectory remains underpinned by a far more potent driver: insatiable AI-chip demand. The recent endorsement from Elon Musk, who called ASML “probably Europe’s biggest company” during a video conversation with CEO Christophe Fouquet on 11 June, has shone a spotlight on the Terafab project. Musk plans to build a massive chip factory in Texas for AI, robotics and space-based data centres, with an initial investment of at least $55bn and potential total costs of $119bn. Each EUV machine costs around $400m, and ASML is the sole global supplier.

Yet the very demand that is lifting the stock also carries a risk. In a Bloomberg Television interview on 17 June, Fouquet delivered a pointed caveat: “New projects are an opportunity as long as you are not limited by capacity.” This year ASML plans to ship more than 60 EUV systems, up from 48 in 2025, and targets around 80 machines for 2027. JPMorgan has noted that the previously communicated capacity ceiling of 90 EUV units per year is not an absolute maximum; the company can ramp production without building new cleanrooms. That flexibility has fuelled a recent wave of analyst optimism.

The bull case is remarkably unanimous. All nine analysts who issued recommendations this month rate the stock a buy, with no hold or sell votes. The average price target over the past three months stands at €1,915, and JPMorgan raised its target to €2,200 from €1,813 in early June, citing “significantly more positive” communication from management and strong order books. Price targets have jumped more than 40% in three months, reflecting a dramatic shift in sentiment.

Meanwhile, ASML is already working on the next-generation High-NA EUV machines, which are nearing volume production, with Hyper-NA technology expected to follow after the early 2030s. Revenue guidance has been lifted to between €36bn and €40bn for the year, up from the previous range of €34bn to €39bn.

The share price has more than tripled from its August 2025 low of €593.60. Last week alone it added 2.87%. But the critical variable for the months ahead is whether ASML can expand EUV production fast enough to serve Terafab, South Korean memory-chip makers and the global AI-infrastructure build-out simultaneously. Fouquet’s candid warning about capacity constraints shows that management is well aware of the bottleneck – and is deliberately flagging it. The second-quarter results, due in July, will reveal just how full the order books have become.