ASML demand outstrips EUV supply through 2028

Cantor Fitzgerald’s C.J. Muse said the quarterly update made the message “very clear” that demand is outrunning supply. He reiterated an Overweight rating and a €2,500 target, implying about 66% upside from the stock’s recent U.S.-listed price near $1,675. ASML remains one of the firm’s top picks.

The scale of the mismatch is what gives the story weight. ASML said planned 30% capacity increases for 2027 and 2028 are only minimums, not ceilings, and it is still looking for ways to lift 2028 output further. Muse believes the company is effectively sold out through calendar 2028, helped by a sharp 160% jump in non-current contract liabilities, which he views largely as customer down payments to secure future machines.

That backlog is feeding directly into earnings power. ASML said third-quarter revenue rose 55% from a year earlier to €11.66 billion, while earnings per share of €12.93 beat expectations. Its December-quarter revenue guide of €14.7 billion at the midpoint also topped consensus. Muse argued the real earnings inflection still lies ahead, with value-based pricing and a fuller order book set to flow through in 2028.

Cantor now sees gross margins reaching 59% in 2028, with 60% possible, and expects EPS of €80, above the current market consensus. That is a meaningful jump for a company already viewed as one of the most strategically important names in global semiconductors. It also helps explain why the stock has lagged the operational narrative: ASML shares were still down on the day and remain below their 52-week high, even after a strong year-to-date gain.

The implications extend beyond ASML itself. Taiwan Semiconductor Manufacturing Co. and other leading foundry customers depend on EUV capacity to push node transitions and support AI-era chip demand, while ASML’s comment that China has little incentive to develop domestic lithography as long as it can keep buying from the company underscores how export policy and customer access remain part of the longer-term risk. China accounted for 23% of third-quarter revenue, keeping the market important even as geopolitical tensions persist.

For investors, the key question is no longer whether ASML can defend its franchise, but how quickly it can turn a sold-out book into incremental margin expansion. If capacity additions stay tight and demand holds, the shares still have room to rerate. If new restrictions, execution delays or a pause in AI-related capex soften the order pipeline, the valuation case becomes less compelling. For now, the waiting list reaches the end of the decade, while the stock has yet to catch up.