ASML Holding (ASML)

Investment Review After Q1 FY2026 Earnings (2026.04.15)

TL;DR

ASML is the global monopoly supplier of EUV lithography systems — the only machines that can pattern leading-edge semiconductor chips. Just reported Q1 FY2026: revenue €8.8B (within guidance), GM 53.0% (high end), net income €2.8B, EPS €7.15. Memory hit 51% of system revenue on AI-driven demand. FY2026 guidance raised to €36-40B (from €34-39B). Stock at $1,421 (45x P/E(ttm)), up from $801 (Jun 2025) on the guidance raise. The risk: China revenue normalizing to ~20% (from 49% peak) under export controls — a ~€3B annual headwind that EUV intensity and installed-base growth must offset.

Summary

Finding	Assessment
5-Year Stock Return	+106% ($691→$1,421). TTM OP +126% ($5.5B→$12,424M) outpaced stock. P/E(ttm) compressed 59x→45x as earnings caught up.
Business Model	Sole global EUV lithography supplier. EUV 36%, DUV 37%, IBM 25% of €33B FY2025 revenue. Logic 66%, Memory 34%.
Competitive Moat	WIDE Absolute EUV monopoly, exclusive Zeiss/Trumpf partnerships, €38.8B backlog (€25.5B EUV). No competitor despite decades of effort.
Past 5-YR Drivers	EUV intensity increase (20+ layers/wafer at 2nm), High NA ramp (5→20 units/year by 2028), AI-driven semiconductor capex.
Recent Stock Move	$1,421 vs. $801 (Jun 2025). Driven by Q1 2026 beat (€8.8B rev, 53% GM), FY2026 guidance raised to €36-40B, “very strong” order intake.
Revenue Trend	ACCELERATING Rev YoY: 13% (Q1 2026) → 18% (Q2 2026E).
Margin Trend	EXPANDING OM%: 36.0% (Q1 2026) → 37.0% (Q2 2026E).
TTM OP Trajectory	ACCELERATING TTM OP QoQ: 3.7% (Q1 2026) → 6.0% (Q2 2026E). TTM OP $12,424M.
Key Opportunities	AI demand: Memory sold out through 2026+, Logic ramping 2nm. High-NA: 500K+ wafers, 80%+ availability, single-expose 3+ nodes. FY2026 raised €36-40B.
Key Risks	Export controls could eliminate ~20% China revenue. Cyclicality: single EUV system €150M+, quarter-to-quarter lumpy. China fell from 49% to ~20%.
Catalysts	Q2 2026 earnings (€8.4-9.0B guide). FY2026 raised guidance execution. High-NA production milestones. NXE:3800F shipping 2027.
P/E(ttm) Valuation	45x near 5-year median (~40x). Monopoly + raised guidance + €39B backlog. Upside 55x on sustained demand; downside 35x on export escalation.

Quarter Just Reported: Q1 FY2026

Q1 FY2026 Key Data

Revenue €8.8B (within guidance), GM 53.0% (high end). Net income €2.8B, EPS €7.15.
Memory reached 51% of system revenue (AI-driven). EUV €4.1B (2 High-NA). Installed Base Mgmt €2.5B (above guidance).
FY2026 guidance raised to €36-40B (from €34-39B), 51-53% GM. Q2 guided €8.4-9.0B, 51-52% GM.

Key Takeaways from Earnings Call

AI demand driving unprecedented capacity expansion across Memory and Logic. Memory sold out through 2026. Order intake “very strong” supporting raised guidance.
High-NA exceeding expectations — 500K+ wafers, 80%+ availability. Single-expose patterning for 3+ nodes in Logic and DRAM, broadening economic case for adoption.
Export control guidance bandwidth accommodates potential outcomes. China normalizing to ~20% of revenue. Management confident in offsetting ~€3B headwind through EUV intensity and installed base growth.

Key Segments and Revenue Mix (FY2025)

Segment	FY2025 Revenue	% of Total	Key Details
EUV Systems	€11.6B	~36%	48 systems shipped (incl. High NA); +39% YoY. Q4: €3.6B incl. 2 High NA units
DUV Systems	€12.0B	~37%	ArF immersion, dry; declined 6% YoY on China DUV export restrictions
Metrology & Inspection	€825M	~3%	YieldStar, HMI multi e-beam; grew 28% YoY on 3D structure adoption
Installed Base Management	€8.2B	~25%	Service, upgrades, field options; +26% YoY driven by growing EUV fleet

End-market mix: Logic €16.1B (66%, +22% YoY), Memory €8.4B (34%, -2% YoY). Q4 system mix: Logic 70%, Memory 30%. China ~29% of FY2025 sales, expected to normalize to ~20% in FY2026 in line with backlog share. FY2025 net income €9.6B (€24.73 EPS); free cash flow €11.0B.

Business Model

SUPPLIERS

Carl Zeiss SMT (EUV optics, 24.9% owned)
Trumpf (EUV laser sources)
ASML Berlin (optical components)
VDL, Prodrive (mechatronics)

Optics / Lasers →

ASML

EUV lithography (sole global supplier)
DUV lithography (ArFi, ArF dry, KrF)
Installed Base Management (~25% rev)
Metrology & Inspection (YieldStar, HMI)

Litho / Service → $ Revenue

CUSTOMERS

TSMC (~30% of revenue, leading-edge logic)
Samsung (logic foundry + advanced DRAM)
Intel (logic fabs, EUV adoption)
SK Hynix, Micron (DRAM, first High NA)

Moat Assessment: WIDE

Absolute monopoly in EUV lithography: ASML is the sole supplier of EUV systems globally, with no competitor having developed an alternative despite decades of effort. Every advanced chip below 7nm requires ASML’s EUV tools, and High NA (0.55 NA) extends this monopoly to sub-2nm nodes through the 2030s.
Deep ecosystem lock-in with irreplaceable partnerships: ASML’s 24.9% ownership of Carl Zeiss SMT and exclusive optics supply agreements create a vertically integrated moat. The Trumpf laser partnership and 5,000+ supplier network represent decades of co-development that cannot be replicated. Customers invest billions in fab infrastructure built around ASML tools, creating massive switching costs.
Technology roadmap visibility through €39B backlog: With €38.8B in backlog at year-end 2025 (more than a full year of revenue), of which €25.5B is EUV (66% of backlog), ASML has unmatched demand visibility. The 2030 revenue target of €44-60B is underpinned by committed customer roadmaps for EUV and High NA adoption. This backlog, combined with 3-4 year lead times for capacity expansion, creates a structural demand buffer that competitors cannot challenge.

Stock vs. Earnings — 5-Year Performance

Stock currently at $1,421, vs. $691 (5 years ago). ASML shares more than doubled as the company rode the EUV adoption cycle and AI-driven semiconductor capex surge, with TTM operating profit more than doubling over the same period.
TTM Operating Profit grew from $5.5B to $12,424M (+126%). Earnings growth outpaced stock appreciation, driven by EUV mix shift, installed base expansion, and operating leverage on higher ASPs. The stock lagged earnings due to P/E compression from 59x to 45x as the market normalized post-2021 valuations.
P/E(ttm) range of 30x–61x reflects cyclical sentiment swings. Multiples peaked during the 2024 AI euphoria (61x in Q2 2024) and bottomed at 30x during the 2023 and early 2025 earnings troughs when revenue growth temporarily stalled. Current 45x P/E sits near the midpoint, pricing in 2026 EUV growth acceleration and Q1 2026 guidance raise.

Chart 1: Stock vs TTM OP & TTM FCF (5-Year)

Past 5-Year Key Drivers

EUV adoption and mix shift: EUV revenue grew 39% YoY to €11.6B across 48 systems in FY2025, with ASPs of €150M+ (Low NA) and €350M+ (High NA). Layer counts per wafer rose from ~14 to 20+ as chipmakers moved to 2nm nodes, while DRAM customers are converting multi-patterning DUV to single-exposure EUV at 4F² architectures.
Installed base expansion and pricing power: The 100+ EUV fleet generates €8.2B in recurring service revenue (FY2025, +26% YoY, up from €4.1B in FY2020) with margins typically exceeding 50%. ASML’s monopoly position enables consistent ASP increases on upgrades and field options.
Operating leverage on higher volumes: ASML’s largely fixed R&D spend (€4.7B, ~14% of sales) drove operating margin expansion from ~26% to ~33% as revenue scaled from €14B to €33B. Restructuring (cutting 1,700 leadership roles, adding 1,400 engineers) signals continued efficiency focus.

Quarterly Key Metrics

	Q1 2024	Q2 2024	Q3 2024	Q4 2024	Q1 2025	Q2 2025	Q3 2025	Q4 2025	Q1 2026	Q2 2026E
Quarter End	Mar 2024	Jun 2024	Sep 2024	Dec 2024	Mar 2025	Jun 2025	Sep 2025	Dec 2025	Mar 2026	Jun 2026
Stock Price	$993	$1033	$833	$693	$663	$801	$968	$1070	$1321	$1421
Stock QoQ	+39%	+4%	-19%	-17%	-4%	+21%	+21%	+11%	+23%	+8%
Rev YoY	-22%	-10%	12%	28%	46%	23%	1%	5%	13%	18%
OM%	26%	29%	33%	36%	35%	35%	33%	35%	36%	37%
R40 (Rev YoY + OM%)	5%	20%	45%	64%	82%	58%	33%	40%	49%	55%
TTM OP ($M)	$8,228	$7,800	$8,059	$9,022	$10,369	$11,198	$11,225	$11,301	$11,721	$12,424
TTM OP QoQ	-9%	-5%	+3%	+12%	+15%	+8%	+0%	+1%	+4%	+6%
FCF/OP ttm	29%	38%	36%	101%	90%	82%	80%	98%	77%	91%
Debt/EBITDA	0.5x	0.5x	0.5x	0.5x	0.3x	0.3x	0.2x	0.2x	0.2x	0.2x
P/E(ttm)	48x	52x	41x	31x	26x	29x	34x	37x	44x	45x

Recent Stock Performance & Drivers

Stock currently at $1,421, vs. $1,033 (Jun 2024). The rally was driven by strong Q1 2026 results: €8.8B revenue (within guidance), 53.0% gross margin (high end of range), €2.8B net income, and EPS of €7.15. Memory reached 51% of system revenue as AI-driven demand accelerated capacity buildouts.
P/E(ttm) expanded from 33x to 45x as the market priced in the Q1 2026 guidance raise. ASML raised FY2026 guidance to €36-40B (narrowed and increased from prior €34-39B range), with “very strong” order intake from both Memory and Logic customers accelerating capacity investments.
TTM OP grew steadily from $11.2B to $12,424M (+11%), supported by EUV mix improvement and installed base growth. Q1 2026 EUV revenue hit €4.1B (including 2 High-NA systems), with Installed Base Management at €2.5B (above guidance), demonstrating the recurring revenue model’s strength.

Opportunities

AI demand driving capacity expansion: Both Memory and Logic customers are accelerating capacity investments. Memory customers are sold out through 2026 with supply limitations persisting beyond 2026. Logic customers are ramping the 2nm node while adding capacity across multiple advanced nodes. Order intake was “very strong” in Q1, supporting the raised FY2026 guidance to €36-40B.
High-NA production progress: Q1 2026 included 2 High-NA system recognitions, with 500K+ wafers processed and 80%+ availability achieved. High-NA now enables single-expose patterning for 3+ nodes in both Logic and DRAM, expanding its addressable use cases beyond initial expectations and accelerating customer adoption timelines.
FY2026 guidance raised: ASML raised and narrowed FY2026 revenue guidance to €36-40B (from €34-39B) with 51-53% gross margin, reflecting stronger-than-expected demand. The raise came alongside Q1 results that delivered €8.8B revenue and 53.0% gross margin at the high end of quarterly guidance, demonstrating execution confidence.

Challenges

Export controls and geopolitical uncertainty: ASML’s guidance bandwidth accommodates potential outcomes from evolving US and Dutch export controls. Further tightening on DUV servicing or new tool categories could reduce the remaining China revenue contribution and compress total addressable market beyond current projections.
Cyclicality and revenue lumpiness: The €36-40B FY2026 guidance range still spans a wide band, reflecting inherently lumpy revenue recognition—a single EUV system is €150M+, and High-NA systems are €350M+. Quarter-to-quarter volatility (Q3 2025 was just 1% YoY growth) can pressure short-term sentiment even within a strong upcycle.
China revenue restrictions: China fell from ~49% of revenue in 2024 peak quarters to ~20% expected in FY2026 due to export restrictions on advanced DUV and EUV tools. The ~€3B annual headwind must be offset by EUV intensity increases, installed base growth, and new product ramps (High-NA, advanced packaging) in unrestricted markets.

Next 12 Months

Q2 2026 guidance: €8.4-9.0B revenue, 51-52% gross margin. Following Q1’s strong beat at the high end, the market will watch whether ASML can sustain above-guidance execution. Continued strength in bookings and EUV mix would support the stock at current 45x P/E levels.
FY2026 raised guidance provides strong visibility: The narrowed/raised €36-40B revenue guidance (from €34-39B) with 51-53% gross margin reflects management’s confidence in the demand environment. “Very strong” order intake with both Memory and Logic customers accelerating capacity suggests upside to the midpoint.
High-NA production milestones: With 500K+ wafers processed and 80%+ availability, High-NA is progressing toward broad production adoption. Single-expose capability for 3+ nodes in Logic and DRAM could accelerate customer commitments and drive incremental orders through 2026.

Next 12-24 Months

NXE:3800F shipping in 2027 at 260 wph: The next-generation Low-NA platform offers a significant productivity step-up, with the roadmap targeting 330 wph thereafter. Combined with the NXE:3800E +10 wph upgrade available now, ASML is driving installed base productivity improvements that support customer ROI and pull-through demand.
2nm node ramp across multiple customers: TSMC N2, Intel 18A, and Samsung 2nm are all progressing, each requiring 20+ EUV layers per wafer. Memory customers remain sold out through 2026 with supply limitations persisting beyond, driving sustained demand for both EUV and DUV capacity additions. The AI capex cycle supports revenue acceleration toward the €44-60B 2030 target.
Capital returns and shareholder value: ASML executed €1.1B in buybacks in Q1 2026 alone, with FY2025 dividend at €7.50/share (+17% YoY). With 100+ EUV systems in the field, installed base management scaling toward €10-12B annually supports the path to 56-60% gross margin targets by 2030 and robust capital returns through the €12B buyback authorization through December 2028.

Core Metrics Scorecard

	Q3'21	Q4'21	Q1'22	Q2'22	Q3'22	Q4'22	Q1'23	Q2'23	Q3'23	Q4'23	Q1'24	Q2'24	Q3'24	Q4'24	Q1'25	Q2'25	Q3'25	Q4'25	Q1'26	Q2'26E
Quarter End	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24	Dec24	Mar25	Jun25	Sep25	Dec25	Mar26	Jun26
R40 > 40%	✅	✅		✅	✅	✅	✅	✅	✅	✅			✅	✅	✅	✅		✅	✅	✅
R40 accelerate	✅			✅		✅	✅					✅	✅	✅	✅			✅	✅	✅
TTM OP QoQ > 10%	✅						✅							✅	✅
TTM OP QoQ accelerate	✅			✅		✅	✅			✅		✅	✅	✅	✅			✅	✅	✅
TTM FCF/OP > 60%	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Debt/EBITDA < 3.5	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅	✅
Total passes	6	3	2	5	3	5	6	3	3	4	2	4	5	6	6	3	2	5	5	5
Stock QoQ	+8%	+7%	-16%	-29%	-13%	+32%	+24%	+6%	-20%	+23%	+39%	+4%	-19%	-17%	-4%	+21%	+21%	+11%	+23%	+8%
P/E(ttm)	48x	49x	46x	31x	27x	34x	34x	33x	26x	31x	48x	52x	41x	31x	26x	29x	34x	37x	44x	45x

Stock rallies align with 5-6 pass quarters, corrections with 2-3 passes. Q3 2021, Q1 2023, and Q4 2024-Q1 2025 (all 6 passes) delivered strong returns, while Q1 2022 (2 passes) saw a -16% decline. The current 5-pass regime supports moderate positive momentum.
R40 and TTM OP QoQ acceleration are the growth signals, but TTM OP QoQ rarely exceeds 10%. ASML passed the TTM OP QoQ >10% threshold only in Q4 2024 and Q1 2025 during the sharpest revenue recovery. R40 acceleration has been more reliable—four consecutive passes (Q4 2025 through Q2 2026) coincide with the current rally.
FCF/OP and Debt/EBITDA are consistent strengths, never triggering risk flags. Both defensive metrics passed in every quarter of the 20-quarter window, with FCF/OP averaging 90%+ and Debt/EBITDA below 0.6x throughout. These metrics keep scorecard floors high even in weak quarters.

Chart: R40 vs Stock Price (Since 2020)

Chart: Scorecard Total Passes vs Stock Price (Since 2020)

Source: SEC EDGAR annual and quarterly filings, company earnings conference calls and presentations.

Disclaimer: This report is for educational purposes only. NO investment advice.