The Zhitong Finance App learned that on October 14, local time, Morgan Stanley released the latest ASML.US (ASML.US) research report, maintaining the stock's “gain” rating, with a target price of 1,700 euros. As of October 13, Asmack closed at 1509.60 euros, and there is still room for upward movement from the target price. Strong demand for equipment brought about by AI computing power chips has become the core engine driving the company's performance and order boom.
Judging from the disclosed results for the third quarter of 2026, Asmack achieved total revenue of 11.662 billion euros, which was basically in line with the market's unanimous expectations; gross margin surpassed expectations by a sharp margin of 57.5%, which was 147 basis points higher than market expectations. Increased sales combined with business structure optimization. In particular, the inventory equipment management (IBM) business performed well. The sector's revenue in a single quarter was 3.289 billion euros, exceeding expectations by 13 percentage points, and became a key force in boosting profits. The stock business is mainly based on equipment upgrades, renovation and maintenance. The profit level is significantly higher than new equipment sales, and it is becoming Asmack's second growth curve.
The order side sends a signal that the industry is booming over a long period of time. The company's management said that the visibility of orders has been extended to 2030, and a large number of confirmed orders have been received in 2028. Market demand is hot in 2029, there are even some orders intended for 2030, and downstream fabs are strongly willing to expand production.
Based on strong downstream demand, Asma raised follow-up operating guidelines. For the fourth quarter, the company's revenue range was 142-15.2 billion euros, with a gross profit margin of 57%. Among them, the inventory equipment management business expected revenue of 3.7 billion euros, 23% higher than market expectations. Driven by the fourth quarter guidance, revenue guidance for the full year 2026 was tightened to 44-45 billion euros, which is at the top of the original 42-46 billion euro range. The annual gross margin guide is 56%, which is higher than the market's unanimous forecast of 93 basis points.
However, strong demand is also putting the supply side to the test. Previously, the market expected the production capacity of low NA EUV extreme ultraviolet lithography machines to maintain a compound growth rate of 30% from 2027 to 2028, with the goal of shipping 85 units or more in 2027 and 110 units in 2028. However, Asmat said bluntly that the current production capacity target can no longer match the actual needs of downstream customers. The company needs to further expand the scale of production capacity, but no new production capacity target values have been announced yet.
In order to mitigate the production capacity gap, Asma chose a two-line parallel approach: on the one hand, evaluating the expansion path of complete machine manufacturing capacity; on the other hand, increasing the delivery of equipment upgrade services, relying on transforming existing equipment and increasing stand-alone throughput, to partially meet customer capacity requirements and reduce dependence on new complete equipment.
Morgan Stanley valued Asmack at a price-earnings ratio of 27 times, at the upper end of the mid-term valuation range of 24-27 times. The valuation was based on the continued increase in fab capital development support. The research report also suggests a two-way risk. On an upward level, capital expenses of logic chip manufacturers, HBM and DRAM storage exceeded expectations, further increases in profit margins on equipment services, and implementation of semiconductor industry support policies in various countries are all expected to drive performance to exceed expectations. Downside risks also cannot be ignored. If demand for terminal consumer electronics and computing power weakens, it will cause fab capital expenses to shrink and orders to be delayed backwards; in addition, the penetration rate of next-generation high NA-EUV equipment falls short of expectations, which will also suppress the company's valuation level.
Overall, the AI wave is driving demand for lithography machines to continue to explode. In addition to traditional new equipment sales, inventory upgrade services have become an important pillar of profit, but production capacity bottlenecks and cyclical fluctuations in downstream capital expenditure are still core variables that the capital market needs to keep track of.