ASML's 2025 System Sales Growth Confirms AI Demand, But Backlog and Policy Risks Underscore Cautious Stance

What happened

ASML reported a 12.4% increase in system sales for 2025, as highlighted in a Zacks article, driven by AI-fueled demand for logic and memory chips that boosted EUV adoption. This aligns with the DeepValue report's narrative of ASML as a crowded proxy for AI-driven wafer-fab capex, supported by record Q4 2025 bookings of €13.2 billion and a €38.8 billion backlog. However, the report critically notes that at a current price of $1,410, the stock already prices in durable growth, leaving minimal margin for error in backlog conversion or policy shifts. Key vulnerabilities include explicit management warnings about order cancellations, pushouts, and escalating export control risks that could impair shipments and installed-base service revenue. Investors must now focus on whether upcoming quarterly results and bookings sustain the guided 2026 sales range of €34B–€39B without new constraints.

Implication

The 12.4% sales growth reinforces near-term demand strength but does not improve the risk-reward profile, given ASML's high valuations with a P/E of 47.9 and EV/EBITDA of 37.8. Backlog realization remains the critical bottleneck, with any slippage likely to compress multiples, especially since management explicitly flags cancellation and delay risks. Export control escalation from political pressure to formal rules poses a tangible threat to revenue visibility, potentially disrupting both new shipments and the growing installed-base business. Monitoring Q1 2026 results against guidance (€8.2B–€8.9B sales, 51%–53% gross margin) and the next bookings print for EUV dominance is essential to gauge execution durability. A pullback toward the $1,250 attractive entry point would offer better asymmetry if fundamentals hold, but current prices demand patience amid crowded sentiment and unresolved uncertainties.

Thesis delta

The new article does not alter the core investment thesis; it simply reiterates the AI-driven demand narrative already embedded in ASML's valuation. The thesis remains focused on waiting for concrete evidence of backlog conversion and policy stability, with no shift in the near-term catalysts or risk factors. Investors should continue to prioritize monitoring quarterly bookings and export developments over headline sales growth.