JP Morgan sees potential for ASML to signal stronger 2027 outlook

What happened

JP Morgan analyst Sandeep Deshpande expects ASML to signal robust demand for 2027 when it reports Q3 results, with initial indications potentially exceeding current consensus. This comes after ASML had already planned 30% capacity increases for 2027 low-NA EUV and DUV immersion and raised 2026 guidance to €43-45B in July. However, the stock currently trades at 59.4x P/E and 46.8x EV/EBITDA, leaving little room for disappointment. The key risk remains whether ASML can convert near-fully booked 2027 capacity into on-time shipments amid supplier and fab-readiness challenges. Until the company confirms the stronger outlook with specific capacity or shipment plans, the WAIT rating from the latest DeepValue report remains appropriate.

Implication

Investors should watch ASML's Q3 report for concrete signs that 2027 demand expectations are being raised, particularly any increase in the 2027 capacity targets or shipment schedules. If ASML guides above current consensus, it could justify a modestly higher valuation, though the stock already discounts flawless execution. Conversely, if the company merely reiterates prior plans without additional specifics, the stock may remain range-bound. The key metric is whether ASML can translate order strength into revenue without slippage, as any delays would pressure the premium multiple. Until that is proven, the prudent stance is to wait for a better entry point near $1,550 or clear evidence of smooth capacity ramp.

Thesis delta

No change to the WAIT rating. The JP Morgan note introduces a potential near-term catalyst if ASML confirms a stronger 2027 outlook, but the core thesis remains that demand is strong but valuation is rich and execution risk is high. An upgrade would require ASML to guide above €12.0B quarterly sales and repeat the full 2027 capacity ramp, which has not yet been confirmed.