FAIR VALUE REPORT
ASML · ASML · OCT 19, 2026 · AFTER RESULTS OF OCT 14, 2026
ASML fell 4% on its best quarter ever. Is $1,641 still too much?
Record sales, a 57.5% gross margin and an 18.8% EPS beat - and the stock dropped anyway. The model says $1,150, Wall Street says $2,300. The $1,641 price sits almost exactly between them, and the quarter explains why.
FPI VERDICT · OCT 19, 2026
DCF 50% · RELATIVE 30% · CONSENSUS 20%
29.9%
above fair value
UNCERTAINTY
MEDIUM ±20%
FAIR VALUE BAND
$920.04 – $1380
PRICE VS BAND
ABOVE THE BAND
Numbers as of publication. Today's fair value and price: ASML stock page → · How uncertainty is rated →
5 MIN READ
THE REPORT IN 3 POINTS
- 01ASML posted record Q3 sales of €11.7 billion, up 55%, with a 57.5% gross margin, yet the stock fell 3.9% on 14 October 2026.
- 02About €0.5 billion of the €5.0 billion profit was a paper gain on its Mistral AI stake, and much of the €11.35 billion free cash flow was customer deposits.
- 03FPI fair value is $1,150 versus a $1,641 price and a $2,300 Street median; 2027 guidance lands on 27 January 2027.
A €5.0 billion profit with a €500 million asterisk
ASML ($ASML) closed the quarter to 27 September 2026 with total net sales of €11.7 billion, up 55% from €7.5 billion in the same quarter of 2025 and towards the high end of its own guidance. Gross margin came in at 57.5%, above the 55-57% range promised in July 2026, because installed-base upgrades brought in €3.3 billion, about €0.4 billion more than planned. Net income was €5.0 billion, or €12.95 per share.
Two asterisks belong on that record. First, roughly €0.5 billion of the €5.0 billion was a paper gain from revaluing ASML's stake in Mistral AI, as the earnings call made explicit - no machine shipped for that money. Strip it out and the EPS beat of 18.8% against the $12.18 estimate shrinks but does not vanish. Second, the "revenue miss" of 1.3% against the $13.14 billion consensus is a currency artefact: ASML reports in euros, and the euro has lost 3.6% against the dollar in the 12 months to 16 October 2026, trading at about $1.12. In euros, there was no miss.
The 3.9% drop on 14 October 2026 also had company. That morning, US consumer prices for September 2026 were reported up 3.7% year on year, above expectations, and the Nasdaq Composite fell 1.88%. ASML guided the quarter to December 2026 to €14.2-15.2 billion of sales with a gross margin around 57%, and lifted the low end of 2026 guidance to €44-45 billion from €43-45 billion.
| REPORTED | REVENUE | VS EST. | EPS | VS EST. | PRICE REACTION |
|---|---|---|---|---|---|
| OCT 14, 2026 | $13.0B | −1.3% | $14.47 | +18.8% | −3.9% |
| JUL 15, 2026 | $10.7B | +4.2% | $8.68 | +8.8% | +2.2% |
| APR 15, 2026 | $10.3B | +2.4% | $8.37 | +8.4% | −2.4% |
| JAN 28, 2026 | $11.6B | +3.8% | $8.55 | −5.4% | −2.2% |
| JUL 16, 2025 | $9.0B | +2.5% | $4.55 | −23.4% | −8.3% |
| APR 16, 2025 | $8.5B | −4.8% | $6.31 | +3.1% | −6.3% |
| JAN 29, 2025 | $9.6B | +25.9% | $7.30 | −1.5% | +7.8% |
| OCT 15, 2024 | $8.3B | −14.4% | $5.74 | +8.5% | −21.6% |
ASML beat the EPS estimate in 5 of the last 8 quarters. Price reaction is the move on the trading day after the results.
€11.4 billion of free cash flow - and whose money it is
Free cash flow was €11.35 billion in the quarter, against €1.3 billion in the quarter to June 2026 and a negative €2.6 billion in the quarter to March 2026. In the same three months, current liabilities rose by €2.7 billion and non-current liabilities nearly doubled, from €6.2 billion to €12.0 billion. That is about €8.5 billion of new obligations in one quarter - mostly customer down payments on machines ASML will deliver in 2027 and beyond.
Think of a builder who collects deposits on ten houses in one month: the bank balance looks spectacular, but the houses still have to be built. The same pattern appeared in the quarter to December 2025 (€10.9 billion of free cash flow), followed by a cash outflow in the quarter to March 2026. The 3.76% free cash flow yield in the data is therefore inflated by prepayments, not just by profit.
The cash is real, though, and ASML is spending it. Buybacks jumped to €4.1 billion for about 2.8 million shares - roughly €1,464 each - from €1.1 billion in the quarter to June 2026. The second interim dividend of €1.88 is payable on 4 November 2026, and the balance sheet holds €8.0 billion of cash against €2.0 billion of debt.
Why the model stops at $1,150 when the stock trades at $1,641
The FPI fair value is $1,150.05, which puts the stock 29.9% above it. Half of the model is a discounted cash flow, and ASML's inputs are of the kind that lift a DCF: a 34.1% net margin, 37.2% return on invested capital and 63.9% return on equity. The complication is the shape of the cash flow. A DCF values the cash a business generates over the years, and it discounts money arriving in 2028 far more heavily than money arriving in 2026 - a quarter of deposits does not change what the machines will earn.
The peer leg (30%) is where the stock looks expensive. A P/E of 41.8x sits just under the semiconductor median of 42.7x, which looks fair. But EV/EBITDA of 33.5x versus 27.5x and a price-to-sales of 14.3x versus 5.9x do not. ASML's two largest customers, TSMC at 27.2x earnings and Nvidia at 26.8x, trade about 15 P/E points cheaper - the supplier is pricier than the chipmakers buying from it.
The P/E has not been this high at any year-end since 2021 (48.8x), and the price is up 53.4% in 2026 to 16 October. A PEG of 2.18x means the reader pays more than two years of growth for each unit of expected growth - a premium, not a discount.
Over the 119 days to October 19, 2026 the share price went from $1929 to $1647 (−14.6%) and the FPI fair value from $1365 to $1150 (−15.7%). The gap moved from 29.3% above fair value to 30.2% above.
Street vs model: a $2,300 median that is exactly double $1,150
On 19 October 2026, Wall Street rated ASML 1 strong buy, 25 buy, 16 hold and 3 sell - a consensus of buy. Price targets run from $2,000 (low) through a median of $2,300 to a high of $2,623 set by Bernstein on 6 July 2026. The mean of $2,305.75 is 100.5% above the FPI fair value; the median is almost precisely twice it. Even the lowest target is 21.8% above the current price.
The targets are also getting stale. Only one was issued in the quarter to 19 October: RBC Capital at $2,100 on 7 October 2026, when the stock was $1,803. It has since fallen 9.0%. Six rating changes since 16 July 2026, all from Citigroup, RBC, Cantor Fitzgerald, Bank of America and Wells Fargo, were holds of existing buy-equivalent ratings - nobody has upgraded or downgraded.
The gap has a mechanism. Management confirmed on the call that price increases agreed with customers have no effect on 2026, a partial effect on 2027 revenue and gross margin, and a full, sustained effect from 2028 onwards. Alongside that, planned output for 2027 and 2028 will not fully meet demand, and capacity growth for 2028 is being studied beyond the 30% previously communicated. The Street is valuing 2028. A DCF discounts 2028 heavily, and the peer multiples cap what the model will pay for it. For the quarter to December 2026, consensus sits at EPS of $16.40 on $16.22 billion of revenue - close to the midpoint of the €14.2-15.2 billion guidance at $1.12 per euro.
26 buy · 16 hold · 3 sell. FPI fair value sits 42% below the lowest Street target, the share price is below the whole range.
Three numbers to watch before 27 January 2027
For the stock to close in on the Street's $2,300, the quarter to December 2026 would need to land at or above €15 billion with a gross margin at or above 57%, and the 2027 guidance due with the results on 27 January 2027 would need to imply growth above 30%. A close back above the 50-day average of $1,739 would be the first technical sign that the 17.5% drawdown from the $1,999.96 peak is over.
For the stock to drift towards the model's $1,150, the signals run the other way: sales below the €14.2 billion floor, China - about 20% of 2026 sales - slipping below that share under export rules, or a close below the 200-day average of $1,577, with the RSI already at 38 and 1-year volatility of 45.9%.
Three dates frame the decision: the €1.88 dividend on 4 November 2026, results on 27 January 2027, and the Capital Markets Day on 10 June 2027, when ASML updates its long-term targets - the day the 2028 pricing story either gets numbers or stays a promise.
HIGHEST WALL STREET TARGET
- 01Reaching Bernstein's $2623 target set on 6 July 2026 needs the December 2026 quarter at or above EUR 15 billion with gross margin at or above 57%.
- 02Agreed price increases have no effect on 2026, a partial effect in 2027 and a full sustained effect from 2028, the year the Street is already valuing.
- 03ASML earns a 37.2% return on invested capital and a 34.1% net margin against semiconductor medians of 5.7% and 10.9%, with EUR 8.0 billion net cash.
BOTTOM OF THE FPI FAIR VALUE BAND
- 01Price-to-sales of 14.3x versus the semiconductor median of 5.9x and EV/EBITDA of 33.5x versus 27.5x leave no cushion if growth slows.
- 02China is about 20% of 2026 sales and a slip below that share under export rules, plus a close under the 200-day average of $1577, would confirm the downtrend.
FPI FAIR VALUE $1150 · FPI fair value of $1150.05 sits far closer to the $920.04 bear anchor than the $2623.00 bull anchor, because a DCF discounts the 2028 pricing benefit that the Street is already paying for today.
FPI fair value blends a discounted cash flow model (50%), relative valuation against sector peers (30%) and analyst consensus (20%), updated daily. How the model works →
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