Key Updates
ASML shares have advanced 3.33% since the August 11 report, rising from $1,788.33 to $1,847.90, marking a fresh cycle high and confirming an uninterrupted recovery trajectory since the July 27 China-related selloff low. No new company-specific news has emerged since the last update; the referenced articles remain those covering the July 15 guidance raise, the July 20 trillion-dollar valuation speculation, and the July 27-28 China DUV competition coverage. The absence of fresh catalysts indicates the current move is driven by sustained momentum and positive sentiment carryover from the Q2 earnings beat rather than new fundamental developments.
Current Trend
ASML is up 72.72% YTD, 31.37% over six months, and has now fully recovered and surpassed pre-selloff levels reached prior to the July 27 China DUV news. The stock has posted five consecutive positive daily closes based on the sequence of prior reports ($1,638.42 → $1,678.22 → $1,740.99 → $1,788.33 → $1,847.90), representing a steady step-pattern uptrend. The 5-day gain of 8.42% signals accelerating momentum, while the more moderate 1-month return of 4.07% reflects the volatility introduced by the July 27 selloff earlier in the period. Each prior consolidation level ($1,788, $1,741, $1,678, $1,638) now constitutes a layered support structure beneath the current price, with no clear overhead resistance given the stock is trading at new highs.
Investment Thesis
The core thesis remains anchored on ASML's monopoly position in EUV lithography and dominant DUV share, underpinned by structural AI-driven capital expenditure from chipmakers including TSMC, Intel, SK Hynix, Samsung, and Micron. The July 15 guidance raise (revenue to €43-45B, gross margin to 54-56%) and Morningstar's fair value increase to €1,800 from €1,200 reinforce a multi-year capacity expansion narrative, with EUV shipments projected to rise from 48 units (2025) to 65 (2026) and 85 (2027).
Thesis Status
The thesis remains intact and has strengthened on a price basis: the market has effectively absorbed the China domestic DUV competition risk that triggered an 8% single-day drop on July 27, with shares now trading well above pre-selloff levels. This suggests investors continue to view the Chinese threat (5 units in 2026, ~20 in 2027) as immaterial relative to ASML's 131 immersion DUV units shipped in 2025 and the broader AI-driven demand backdrop. However, the absence of new fundamental catalysts behind the latest 3.33% gain raises the question of whether near-term price action is outrunning newsflow, warranting monitoring for a potential consolidation phase.
Key Drivers
The dominant driver remains the July 15 guidance raise and Q2 earnings beat, which lifted full-year sales and margin outlooks on unrelenting AI demand. This was reinforced by Morningstar's fair value upgrade to €1,800 citing improved long-term capacity and revenue prospects. Structural demand from the AI chip boom, detailed in the Reuters explainer on ASML's lithography monopoly, continues to underpin sentiment. Countervailing this is the China competitive threat flagged by Bloomberg and Morningstar, which has apparently been priced through. Speculation around ASML becoming Europe's first trillion-dollar company continues to support the bullish narrative.
Technical Analysis
ASML is trading at $1,847.90, a new high in the current sequence of reports, having gained ground on five consecutive report intervals since the August 3 low of $1,638.42 (+12.8% cumulative over the period). The 1-day move of +2.09% combined with a 5-day gain of 8.42% indicates strong short-term momentum, though the pace of ascent (accelerating relative to the 1-month +4.07%) raises the risk of near-term overextension. Immediate support levels sit at $1,788 (August 11 close) and $1,741 (August 7 close), with deeper support at $1,678 and $1,638 corresponding to the post-selloff consolidation zone. No resistance level is evident from the data as the stock is trading at fresh highs, leaving price discovery as the dominant near-term technical dynamic.
Bull Case
- Raised FY guidance to €43-45B revenue and 54-56% gross margin on unrelenting AI-driven demand, both quarterly figures exceeding analyst expectations — Morningstar, July 15
- Structural monopoly in EUV and over 80% share in DUV lithography, with EUV shipments projected to rise from 48 units (2025) to 65 (2026) and 85 (2027) — Reuters, July 28
- Morningstar raised fair value to €1,800 from €1,200, projecting €70B revenue and €69 EPS by 2028, ahead of prior 2030 targets — Morningstar, July 15
- Planned capacity expansion of Low-NA EUV and DUV immersion by 30% in 2027 and a further 30% in 2028 to meet customer orders — Morningstar, July 15
- Market speculation on ASML becoming Europe's first trillion-dollar company, with valuation near $700B following Q2 results — Reuters, July 20
Bear Case
- Chinese state-backed firm plans to mass-produce domestic DUV tools, targeting China which accounted for 29% of 2025 sales (36% in 2024), posing a longer-term competitive threat — Morningstar, July 27
- Stock's 6.6-8% single-day drop on the China competition report demonstrates high sensitivity to competitive newsflow despite subsequent recovery — Bloomberg, July 27
- Execution risk and uncertainty over sustained hyperscaler capex (Google, Amazon) alongside supply chain and customer execution risk at TSMC and Samsung — Reuters, July 20
- Ongoing U.S. pressure regarding export restrictions to China adds regulatory overhang to the China revenue base — Reuters, July 28
- Morningstar bear scenario models stalled growth and capacity digestion in 2029-30, with EPS falling to €57 versus €77 base case and valuation resetting to €1,100-1,400 — Morningstar, July 15