ASML Can’t Build Machines Fast Enough, but Its Stock Is Already Priced for Perfection

The Dutch lithography giant is running a factory floor race most industrial companies would envy — customer orders stretch into 2028, capacity expansion targets are being pulled forward, and the latest revenue guidance of €43bn to €45bn for 2026 stands nearly €4bn above the consensus estimate of €39.40bn. Chief executive Christophe Fouquet describes a half-year order intake as “extremely strong”, driven by the relentless build-out of artificial intelligence infrastructure. Yet ASML’s stock closed Friday at €1,528.00, down 2.51% on the day and 2.92% below the prior week’s level — a post-earnings drift that began the moment the initial euphoria faded.

The pattern was telling. On the day of the guidance upgrade in mid-July, shares opened more than 7% higher, then slipped to a gain of just 3.4% in the afternoon, and eventually closed 0.49% in the red. That reversal has continued, leaving the stock 12.59% below its 52-week high of €1,748.00 reached at the end of June. The market is not questioning the strength of ASML’s business; it is questioning how much of that strength is already baked into a share price that has climbed 65.82% since the start of the year and 137.41% over twelve months.

Morningstar analyst Correonero captures the tension: “It is a lot priced in — we see the stock as slightly overvalued.” The numbers bear that out. ASML trades just 1.53% above its 50-day moving average of €1,504.90 and a full 30.53% above its 200-day average of €1,170.60 — a sign that the longer-term run has been extraordinary, but near-term momentum has stalled. The 14-day relative strength index of 47.5 sits squarely in neutral territory, reflecting neither panic nor euphoria, but a market digesting a massive repricing.

Meanwhile, the operational story remains one of scarcity. Finance chief Roger Dassen said the company is working to cut the construction and testing time for its most advanced lithography machines by roughly one third. Currently, it takes more than a year from order entry to delivery of an extreme ultraviolet (EUV) system; the cycle time from clean-room start to shipment was about 22 weeks only a few quarters ago. ASML plans to expand capacity for low-NA EUV systems by 30% in 2026 and for deep ultraviolet (DUV) immersion systems by the same margin. Orders for EUV gear already run through 2028, backed by investments in AI servers, advanced processors and memory chips.

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The second-quarter results that accompanied the guidance were robust: €9.3bn in revenue, €2.9bn in net profit, and a third-quarter revenue forecast of €11bn to €12bn. The upgraded annual outlook also lifts the gross margin to 54%–56%, from a prior range of 51%–53%. Yet the reaction on the trading floor has been muted — a reminder that even a monopoly on chip-making lithography is not immune to valuation gravity.

What hangs over everything is the political shadow from Washington. ASML still expects China to account for about 20% of 2026 revenue, even though the share fell to 14% in the second quarter from 19% in the first. A bipartisan group of US lawmakers has introduced legislation that would block sales of DUV machines to Chinese chipmakers, a bill that still faces a lengthy legislative process. The risk is not new — in April, the stock dropped 6% when the proposal surfaced — but it continues to temper enthusiasm. Correonero notes that past restrictions triggered buying sprees by Chinese customers hoarding machines before tighter rules kicked in, a paradoxical effect that could still play out. Two temporary stabilisers — the suspension of the so-called Affiliates Rule and a ceasefire on Chinese rare-earth export restrictions — both run until November 2026, but the broader debate in Washington over stiffer controls remains open.

ASML’s annualised 30-day volatility of 60.59% captures the nervy tone. Every data point on order backlogs, export policy or capacity plans is scrutinised for signs that the AI investment cycle is either accelerating or hitting a fault line. The fundamental story is arguably as strong as it has ever been. The question is whether the share price has already written that ending before the machines are even shipped.

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