ASML (ASML) reported record third-quarter sales of €11.7 billion on Wednesday, October 14, up 25% from the second quarter, with net income of €5.0 billion. It guided fourth-quarter sales to €14.2 billion to €15.2 billion at a gross margin of about 57%. It also narrowed its 2026 sales outlook to €44 billion to €45 billion, from the €43 billion to €45 billion it set in July after a strong second quarter.
The sales guide alone isn’t the surprise. Analysts polled by LSEG expected €14.19 billion, so the bottom of ASML’s range only matches consensus. The margin is what moved.
ASML Can’t Build Machines Fast Enough
CEO Christophe Fouquet said ASML’s planned supply for 2027 and 2028 “will not fully meet the demand of our customers.” ASML plans to add 30% of capacity in 2027 and is studying how to go beyond the 30% already flagged for 2028. It also says some customers want to place orders for 2029 and 2030.
That flips the usual chip-equipment worry. The risk for ASML used to be customers pausing orders. Now ASML’s own output could cap how fast chipmakers like TSMC (TSM) add advanced capacity, which makes lithography the pace-setter for the whole AI fab buildout.
Upgrades Lifted the Margin, Pricing Comes Next
CFO Roger Dassen said the margin was driven mainly by installed base sales and upgrades, with higher volumes and a favorable product mix also helping. Over the eight quarters through June 2026, gross margin ranged between 50.8% and 54.0%.
Q3 came in at 57.5%, 3.5 points above the top of that range. The Q4 guide of about 57% also beats the 55.4% LSEG consensus by 1.6 points. Pricing should add a second lift later: Dassen said ASML has finished value-based pricing talks with its key customers, with the benefit showing partly in 2027 and fully in 2028 and beyond.
The Street Has Already Moved, but Not All the Way
Analysts haven’t been slow on ASML. The mean target rose from €777 at the end of September 2025 to €2,075 on October 13, up 167% while the stock rose 86% to €1,510. That mean sits 37% above Tuesday’s close. The ratings show 31 buys, 6 outperforms, 4 holds and 1 sell, against 11 holds a year earlier.
The October 13 figures predate today’s release and any subsequent analyst revisions.
What ASML Stock Is Worth If the Boom Cools
Chip-equipment booms end, and capacity added near the top can sit idle when they do. So the question I cared about was what ASML is worth if this supply crunch doesn’t last. I kept revenue growth at 11.8% a year, well under the 30% capacity add and under ASML’s 18.5% average of the past five years. Q3’s reported net margin was 42.5%, but that includes a €500 million revaluation gain on ASML’s Mistral investment, and without it the margin was closer to 38%. I set mine at 39.2%, a small step up that the new pricing should cover from 2027, and let the P/E shrink about 1.8% a year.
Even on those numbers, my model gets to about €2,864 by the end of 2030. That’s an 89.7% total return from €1,510, or 16.4% a year, and about 38% above the Street’s mean target.
Conclusion
ASML’s limit is now how many machines it can build, and the value-based pricing that starts landing in 2027 isn’t in the margin yet.
My model reaches about €2,864 by the end of 2030, assuming 11.8% annual revenue growth, a 39.2% net income margin and a gradually declining P/E. That suggests potential upside even after an 86% run. The next check is whether Q4 delivers on ASML’s sales and margin guidance.
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