Wall Street Turns Universally Bullish: ASML Capacity Surges, Putting the Memory "Peak Theory" to Rest!

ASML delivered a Q2 performance far exceeding expectations, significantly raised its full-year guidance, and rarely provided a capacity expansion roadmap for 2027–2028, directly addressing core market concerns about the sustainability of AI-driven demand. Major Wall Street investment banks immediately voiced collective support, with institutions such as Goldman Sachs, JPMorgan, and Barclays unanimously maintaining or reiterating their buy ratings, believing that these results thoroughly validate the AI supply bottleneck thesis and constitute a powerful rebuttal to the bearish narrative that memory prices will "peak in 2028."

ASML’s Q2 revenue reached €9.3 billion, surpassing the Bloomberg market consensus of €8.9 billion, while its gross margin of 54% significantly outperformed the guided range of 51%–52%. The company subsequently raised its full-year 2026 revenue guidance from €36–40 billion to €43–45 billion, with the midpoint approximately 11% higher than market consensus; the full-year gross margin guidance was also raised to 54%–56%. More critically, management explicitly stated it would expand low-NA EUV and immersion DUV capacity by approximately 30% in 2027 and 2028 respectively, a statement that directly triggered a significant upward revision of market earnings expectations for 2028.

Following the announcement, ASML’s share price in Amsterdam rose by approximately 4%, while Nasdaq 100 index futures simultaneously gained about 40 basis points. SK Hynix’s Seoul-listed shares surged 8.8% in a single day, catching up on the 27% gain previously seen in its US depositary receipts. Goldman Sachs maintained its buy rating with a 12-month target price of €2,000, implying approximately 29% upside potential from the current share price; JPMorgan also maintained its overweight rating with a target price of €1,900.

Results Broadly Beat Expectations, Q3 Guidance Further Surprises Market

ASML’s core financial metrics for Q2 all exceeded market expectations. According to a Goldman Sachs research report, Q2 revenue was €9.327 billion, 6% above market consensus; EBIT was €3.456 billion, 13% above consensus; and EPS was €7.58, approximately 11% above consensus. The gross margin of 54% not only far exceeded the upper end of the guidance but was also about 230 basis points higher than market consensus.

Q3 guidance also significantly exceeded expectations. The company expects Q3 revenue to be between €11 billion and €12 billion, with the midpoint approximately 11% higher than market consensus; gross margin guidance is 55%–57%, implying that Q3 EBIT will be about 26% higher than market consensus. According to a JPMorgan research report, the Q3 revenue midpoint of €11.5 billion is 12% higher than consensus, and the gross margin midpoint of 56% is 350 basis points higher than consensus.

JPMorgan analyst Sandeep Deshpande pointed out that the earnings beat was partly driven by the Installed Base Management (IBM) business, whose revenue exceeded expectations by approximately €300 million. Software-led productivity upgrades and the continuous expansion of the EUV service installed base are expected to drive over 30% growth in this business this year, providing additional support for gross margins.

Capacity Expansion Roadmap Exceeds Buy-Side Expectations, 2028 Earnings Potential Significantly Revalued

The most market-focused aspect of these results was management’s clear stance on capacity expansion for 2027–2028. ASML stated that, on the basis of approximately 65 low-NA EUV units in 2026, it will expand production by about 30% in 2027 to approximately 85 units, and is studying a further 30% expansion in 2028 to about 110 units. Meanwhile, immersion DUV capacity will also expand from approximately 130 units in 2026 to about 169 units in 2027, and further to approximately 220 units in 2028.

According to Goldman Sachs’ calculations, the above capacity planning implies that low-NA EUV shipments in 2027/2028 will reach 85/110 units, far exceeding the market consensus of 85/89 units; immersion DUV shipments will reach 169/220 units, also significantly surpassing the consensus of 137/146 units.

JPMorgan noted that the 2028 capacity guidance has exceeded the bank’s previous highest sell-side forecast. Rough calculations suggest that if the above capacity plans are implemented, ASML’s 2028 EPS will exceed €65, and actual profits could be even higher given the strong momentum of the Installed Base Management business. Comments from the Goldman Sachs trading desk also pointed out that the 2028 EUV capacity target of approximately 110 units has fallen into the "super-optimistic range" (110 to 120 units), far exceeding the sell-side consensus expectation of about 89 units.

Goldman Sachs stated that ASML has basically locked in most of the EUV orders required for 2027 and has already received a considerable number of orders for 2028, with management describing order intake as "extremely strong."

AI Demand Accelerates, Dual Expansion in Logic and Memory

Management explicitly stated that AI-driven demand continues to strengthen in both the logic chip and memory sectors, supporting customers in further expanding capacity at advanced process nodes. In the advanced logic sector, ASML noted that customers are simultaneously increasing capacity at the 5/4/3nm nodes to meet AI demand, while pushing as aggressively as possible for 2nm mass production and beginning preparations for the transition to the 1.4nm process. The company expects advanced logic revenue to grow by approximately 25% year-over-year in 2026.

Regarding memory, ASML stated that tight supply of DDR and HBM is driving customers to accelerate investment, with increased intensity of EUV and advanced immersion lithography further pulling equipment demand. The company expects memory revenue to grow by approximately 75% year-over-year in 2026.

Comments from the Goldman Sachs trading desk pointed out that as the memory market transitions to advanced 1c/1d nm nodes required for HBM4/HBM5 and traditional server DRAM, memory manufacturing is undergoing a fundamental paradigm shift. The number of EUV layers for 1c DRAM has increased to more than five, while 1d and 0a generations plan to fully adopt EUV technology across all layers. Deep ultraviolet multi-patterning processes have hit physical limits, making ASML a primary beneficiary of this structural transformation.

Goldman Sachs further pointed out that the wafer intensity required for HBM is far higher than that for traditional DRAM. This dual expansion is severely squeezing global foundry capacity, keeping memory prices high for a longer period. Given the structural complexity of transitioning to advanced nodes, bearish arguments predicting that memory prices will peak before 2028 or that supply gaps will significantly ease "sound premature."

Wall Street Collective Endorsement, Disagreement Only on Whether 2027 Guidance Is Aggressive Enough

Several major investment banks quickly issued positive evaluations after the results release, but there were subtle differences in the interpretation of the 2027 EUV capacity guidance.

Barclays analyst Simon Coles stated that ASML delivered most of what investors were expecting, and the low-NA EUV capacity guidance for 2027 and 2028 should reduce market debate on whether the company is supply-constrained. He noted that low-NA EUV order value in the first half could reach as high as €22 billion, reaching historical record levels.

JPMorgan’s Sandeep Deshpande believed that although the company failed to reach 90 EUV units of capacity in 2027, "we think this is irrelevant," because the 2028 EUV and DUV capacity guidance far exceeded expectations, and the approximately 35% revenue growth in 2026 has already exceeded current market expectations for the overall growth rate of the wafer fab equipment industry. The company is effectively guiding for approximately 30% growth over the next two years.

Morgan Stanley analyst Lee Simpson pointed out that although the company no longer discloses order data, management stated that order intake in the first half remained "very strong," with customers seeking to accelerate capacity expansion, signaling strong sales momentum for 2027.

Jefferies analyst Janardan Menon took a relatively cautious stance, believing that the company’s outlook comments were mixed. The strong growth in Installed Base Management business sales and gross margin was particularly positive, but the 2027 EUV guidance was lower than recent sharply rising market expectations.

Oddo BHF expects market consensus earnings forecasts to be raised by approximately 20%, stating that "ASML remains an unrivaled story of technological dominance, now benefiting from a fundamentally different cycle driven by AI."