Key Takeaways
- ASML fell 6.1% on Friday after Intel’s forecast set off a global chip selloff, even though ASML says it cannot build enough machines for 2027 and 2028.
- Third-quarter sales hit a record €11.7 billion, and fourth-quarter guidance of €14.2 billion to €15.2 billion points to another record.
- Taiwan Semiconductor sounded cautious about 2027, while China still makes up about 20% of ASML’s sales.
- The January 27 report will show whether ASML hit its Q4 range and how far it can push 2028 capacity.
ASML Holding (ASML) fell 6.1% to €1,413 on Friday. The damage came from someone else’s earnings.
Intel (INTC) was on course for its worst day ever after a forecast that showed PC weakness clouding its turnaround, and the selloff spread to chip stocks worldwide. Intel matters to ASML directly, too, because it has already exposed more than 1 million wafers on ASML’s High-NA EUV machines.
Taiwan Semiconductor (2330) added to the unease two weeks earlier. It called itself “prudent” going into 2027, even after a sixth straight quarter of record profit.
That leaves an awkward split. ASML says it cannot build machines fast enough, while its biggest buyers are choosing their words carefully.
Still, the stock is up 44% this year.
A record quarter with no slack
ASML’s third quarter landed near the top of its own forecast:
- Sales rose 55% to a record €11.7 billion.
- Gross margin hit 57.5%, above guidance, as installed-base sales came in at €3.3 billion.
- Net income reached €5.0 billion, including about €0.5 billion from a higher valuation on its Mistral AI stake.
The fourth quarter should be bigger still. ASML guided to €14.2 billion to €15.2 billion and raised its full-year range to €44 billion to €45 billion.
Here’s how quickly the quarters have stacked up…
The Q4 midpoint sits about 26% above Q3, so another record is already built into the guide.
Customers are queuing for 2030
CEO Christophe Fouquet was direct in the results release. Supply as currently planned for 2027 and 2028 “will not fully meet the demand of our customers,” he said. Some customers even want to place orders for 2029 and 2030.
So ASML is studying how to push 2028 capacity beyond the 30% increase it had already planned. Meanwhile, low-NA EUV output should reach about 65 systems this year, nearly 50% more than the 44 it shipped in 2025.
Customers are paying ahead to hold their place in line, and that shows up in the cash.
Free cash flow hit €11.4 billion in Q3 alone, although down payments make single quarters lumpy. ASML put about €4.1 billion of that toward buybacks in the quarter.
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Sold out and still exposed
After Friday, ASML trades at 24.6x forward earnings. Applied Materials, which fell 7.5% in the same rout, trades at 22.1x.
Is that premium too rich?
Analysts expect EPS to grow about 50% a year over the next two years, so 24.6x looks reasonable if the backlog converts on schedule.
China is the main overhang. It made up 23% of system sales in Q3 and should stay near 20% for the year. CFO Roger Dassen has also warned that a U.S. bill limiting DUV sales to China would be counterproductive.
High-NA is the slower story. Its full financial impact starts in 2028, with only some effect in 2027.
Wall Street’s average target of €2,097 implies 48% upside from Friday’s close.
My take: Friday’s drop says more about Intel’s PC business than ASML’s order book. However, I’d take TSMC’s caution seriously, because a slower 2027 from the largest buyers is how a sold-out year slips into a delayed one. At 24.6x, I think the balance still tilts in ASML’s favor.
The January 27 report is the next test. It will show whether Q4 landed inside the €14.2 billion to €15.2 billion range and how much extra 2028 capacity ASML can find.
So what is ASML stock actually worth?
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Disclaimer:
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