Hook & thesis
The last several weeks have shifted ASML's risk/reward materially. Net bookings accelerated meaningfully in 2025 (up ~48%), leaving a backlog near 039 billion that underpins multi-year revenue visibility for EUV systems. Combine that with a 012 billion buyback program and continued AI infrastructure buildouts, and you have a dominant supplier positioned to outgrow the semiconductor equipment cycle.
That said, the stock is not cheap on headline multiples. The trade here is tactical and structural: buy exposure to ASML's EUV growth now, manage valuation risk with a disciplined stop, and hold into 2026-2028 where backlog conversion and continued AI capex should re-rate the shares. My actionable plan below gives a precise entry, stop and target for a long trade with a long-term (180 trading days) horizon.
What ASML does and why the market should care
ASML is the near-monopolistic provider of extreme ultraviolet (EUV) lithography tools used to pattern the most advanced logic and memory chips. Their machines - the only commercially viable EUV steppers - are critical capital equipment for foundries and integrated device manufacturers building leading-node and AI-accelerated chips.
Why that matters: AI model training and inference are shifting semiconductor demand toward higher-performance nodes and more advanced packaging, both of which require EUV in production ramps. Customers cannot substitute ASML's EUV capability, so a surge in AI-focused data center builds and next-generation chip programs translates directly into durable order flow for ASML.
Supporting data points
- Backlog & bookings - public coverage cites a backlog of ~039 billion and net bookings up ~48% in 2025 (reported 02/14/2026).
- Buybacks - ASML authorized a 012 billion buyback program (reported 02/05/2026), which reduces float and supports EPS while management executes on backlog delivery.
- Market cap and valuation - market capitalization stands at roughly $545.2 billion with a trailing PE of ~50.4 and PB of ~24.4.
- Price action and technicals - current price near $1,406.61 with 10d and 20d SMAs around $1,403 and $1,401, 50d SMA at $1,242. RSI is ~57.9, and MACD shows bearish momentum short-term (negative histogram), hinting near-term consolidation risk.
- Liquidity and short interest - average daily volume is ~1.64M shares (2-week average), and days-to-cover sits around 1 day, limiting extended short-squeeze dynamics but also indicating limited persistent short pressure.
Valuation framing
On a headline basis ASML is expensive: $545B market cap and a trailing PE north of 50 imply high growth expectations are already priced in. However, the company sits in an oligopoly for EUV hardware with durable pricing power and high barriers to entry. If the backlog converts and revenue grows at the ~18% annual rate some market commentators project, multiples anchored to revenue growth could be justified.
Put another way: paying a premium today is reasonable only if ASML converts backlog into margin-accretive revenue across 2026-2028 and retains pricing/technology leadership. The 012 billion buyback helps the EPS math, but investors must watch shipment cadence and gross margins as the real confirmers of valuation.
Catalysts to drive the trade
- Backlog conversion - steady EUV system shipments and service revenue growth as ASML converts its ~039 billion backlog into revenue across 2026-2028.
- AI data center builds - accelerating capital spending by hyperscalers and AI cloud operators on next-gen GPUs/accelerators that drive demand for advanced nodes and EUV.
- Buyback execution - the 012 billion program, if deployed meaningfully, should support EPS and the multiple.
- Customer wins and tool upgrades - announcements of new node tape-outs or multi-fab orders from foundries that indicate increased EUV content per wafer.
Trade plan (actionable)
Thesis: Enter a long position to capture EUV backlog conversion and AI-capex tailwinds into 2026-2028 while using a clearly defined stop to limit downside given current premium valuation.
| Entry | Target | Stop | Direction | Horizon |
|---|---|---|---|---|
| $1410.00 | $2000.00 | $1250.00 | long | long term (180 trading days) |
Rationale for levels:
- Entry $1,410 is near the recent trade range and aligns with short-term averages; it's close to today's price and avoids chasing a breakout.
- Stop $1,250 sits below the 50-day EMA (~$1,271.89) and gives room for short-term volatility while protecting against a rotation that signals backlog or demand issues.
- Target $2,000 is a multi-quarter target consistent with market scenarios where bookings continue and revenue/margins expand, supporting a re-rating of the multiple.
Holding period explanation: long term (180 trading days). The backlog conversion and complex EUV delivery and install schedules unfold over many quarters, so this trade needs time to play out. Expect intermittent volatility and use the stop to manage risk. Consider trimming into strength if shares move quickly toward the target or if buyback announcements accelerate.
Risks and counterarguments
Below are the principal risks that could invalidate the trade:
- Execution risk: ASML must deliver complex EUV machines on schedule. Any manufacturing or installation delays would compress revenue recognition and pressure the share price.
- Customer capex slowdown: If hyperscalers or foundries retrench on AI spend or push-out purchases, backlog health could deteriorate rapidly despite its current size.
- Valuation vulnerability: With a trailing PE of ~50 and PB >24, the stock is exposed to multiple compression if growth disappoints; a relatively small miss on shipments or guidance could trigger outsized downside.
- Geopolitical & export controls: Any new restrictions on equipment exports to large customers could reduce addressable demand or slow order fulfillment.
- Competition & substitution: While ASML is unique in EUV, alternative process routes or sudden shifts in chip architecture investing less in advanced nodes could undercut demand longer term.
Counterargument:
Some will argue that paying for ASML today is paying for perfection - backlog may exist, but shipping complex capital equipment at scale has recurring execution risk. Additionally, the mid-cycle demand can be lumpy and prone to macro-driven pull-ins or pull-outs. If 2026 orders normalize or customers focus on cost control, current multiples could prove too generous.
That counterargument is valid, which is why the trade uses a hard stop at $1,250. The plan is not a blind buy; it assumes that the current order backlog converts and that buybacks and AI demand will provide sufficient tailwinds to re-rate the shares over the next several quarters.
What would change my mind
I will reassess or tighten stops if any of the following occur: built-in backlog disclosures show material cancellations or push-outs; quarterly shipments and gross margins miss consensus by a large margin; management significantly reduces capital return plans; or regulatory actions meaningfully limit access to large markets. Conversely, accelerated EUV shipment rates, larger-than-expected buyback execution, or an uptick in visible customer program announcements would make me more aggressive on size and extend the target higher.
Conclusion
ASML is a high-quality, almost uniquely positioned company with an EUV backlog and AI-driven demand that plausibly justify continued premium valuation. The trade here is a disciplined long: enter near $1,410, protect capital with a stop at $1,250, and aim for a $2,000 target within a 180-trading-day horizon. The upside is compelling if backlog conversion and AI capex follow through, but execution, valuation and policy risks require tight risk management.