ASML Hits New Highs on Raised Guidance; Valuation Stretched

What happened

ASML's Q2 2026 results smashed expectations, with management lifting full-year sales guidance to €43–45 billion and gross margin to 54–56%, far above the prior €36–40 billion range and the DeepValue report's bull case of €40 billion. The upgrade reflects surging AI-driven demand across logic, DRAM, and immersion systems, prompting capacity expansions through 2028 and boosting EBITDA and free cash flow estimates by 24% and 28%. Yet at $1,815, the stock trades at 61x P/E and 48x EV/EBITDA, multiples that leave zero margin for safety and price in years of perfection. The DeepValue report flagged a WAIT rating, and this news does not alter that stance—the stronger outlook is already discounted, making further upside dependent on even higher guidance or a valuation reset.

Implication

The guidance upgrade validates robust AI demand, but with the stock at 61x P/E and limited upside from here, investors should wait for a better entry near $1,650 or a clearer catalyst. The thesis delta: guidance outperformed even the bull case, shifting the base case higher, but extreme multiples keep the rating at WAIT.

Thesis delta

Guidance raised to €43–45 billion from prior €36–40 billion, well above the DeepValue report's bull case of €40 billion, indicating stronger AI demand than previously modeled. However, the stock's 61x P/E already prices in this upgrade, and the WAIT rating from the report is maintained until valuation becomes more favorable.