ASML is now up ~90% since our recommendation back in June 2025.

When we covered the company, it was in a 35% drawdown, driven by ASML’s China exposure and weak orders from memory customers.

Our thesis was simple: None of the cutting-edge chips powering the AI boom can be made without ASML. The market was overly focused on short-term headwinds, and it was only a matter of time before sentiment changed.

And it did change.

As we highlighted in our report, the memory inventory glut was washed out by the end of last year, and we are now in the midst of a shortage of memory chips. Average RAM prices have increased by a factor of 10 since June 2025.

Here’s a recap of the latest Q1’26 earnings report:

• Q1 results: Q1 total net sales of €8.8 billion, a gross margin of 53.0%.

• Full Year 2026 Guide (raised): ASML now expects total net sales of €36 billion to €40 billion, with a gross margin of 51% to 53%. This is a meaningful rise from the prior guidance of €34–39 billion. This includes potential export controls and bans by the USA. ASML’s revenue is now derisked from bans.

• Demand exceeds supply: demand at ASML’s customers is supported by long-term commitment from their own customers.

• Better geographic mix: Demand from Chinese customers is expected to be significantly lower in 2026 than in 2025. In Q1’26, revenue from China was 19% (vs. 36% last quarter). Revenue from Korea surged.

Stock is expensive at ~40x forward PE ratio. Drawdowns (due to any macro events) may be good opportunities to get exposure here.