ASML Earnings: Long-Term Prospects Vastly Improved

Key Morningstar Metrics for ASML

• : EUR 1,800
• : ★★

• Morningstar Economic Moat Rating

  : Wide

• Morningstar Uncertainty Rating

  : High

What We Thought of ASML’s Earnings

We are updating our long-term ASML ASML forecasts as the firm intends to expand Low-NA EUV and DUV immersion capacity by 30% in 2027 and another potential 30% in 2028.

Why it matters: Expansion would bring capacity to 85/110 Low-NA EUV systems by 2027-28 and 170/220 DUV immersion systems by 2027-28, compared with today’s 65 and 130 units, respectively. The high-demand environment has become more real in the second quarter, as customers have begun committing orders with down payments, giving ASML confidence to expand. The new 2027 capacity is virtually all booked, and we estimate the additional 30% 2028 expansion is very likely to proceed as ASML has already received large orders.

• While our previous 2030 revenue forecast was anchored to the top end of ASML’s long-term guidance of EUR 60 billion, this number looks irrelevant now, as we estimate ASML could deliver close to EUR 70 billion in revenue and EUR 69 in EPS already in 2028, even without fully utilizing its capacity.
• We must wait until the 2027 capital markets day for new revenue targets, but we estimate 2030 sales could exceed EUR 80 billion with little new capacity additions. After a 28% 2026-28 sales CAGR, we model high-single-digit growth in 2029-30, as growth moderates after the ambitious expansion.

The bottom line: We raise our fair value estimate to EUR 1,800 from EUR 1,200 per share for wide-moat ASML as we incorporate the new forecasts into our model.

Bears say: To stress test our new fair value, we model a bear scenario where after the massive 2026-28 expansion, sales growth stalls in 2029-30, similar to what happened in late 2024. Under this scenario, a two-year period of capacity digestion would arrive, bringing 2029 EPS to EUR 57 versus EUR 77 in our base case. ASML’s forward PE would likely contract to the 20-25 times range, where it has historically traded during cycle troughs, resetting valuation to the EUR 1,100 to EUR 1,400 range. This means our bear case is aligned with our previous base case.