ASML (1K) | Buy | The multiple is earned, not stretched

Research evidence excerpt

ASML (1K) | Buy | The multiple is earned, not stretched

ASML Buy | Target Price: EUR1830.00

What drives our upgrade

Pricing: not a price spike

Unlike memory makers aggressively capitalizing on steep DRAM hikes and HBM4 premiums,

ASML historically avoids opportunistic pricing. It maintained pricing discipline through the

downturn and, in our view, is unlikely to gouge customers now.

Instead, we believe ASML's pricing power increasingly comes from monetising productivity. In a

sold-out market, customers cannot simply solve bottlenecks by purchasing more tools.

Increasingly, they are paying for wafer economics. That translates into modest premiums for

urgent delivery slots, a richer mix of higher-throughput systems such as the NXE:3800E and

upcoming NXE:3800F, and a growing contribution from Installed Base upgrades, software

enhancements and performance improvements.

This distinction matters because productivity-driven revenues are among the highest-margin

opportunities in ASML's portfolio. As EUV becomes increasingly yield-critical, customers place

greater value on throughput gains and performance upgrades than on incremental exposure

capacity alone. That incentive is particularly strong in memory, where rising HBM and advanced

DRAM layer counts are colliding with limited tool availability.

We model a roughly 6% CAGR in low-NA EUV ASPs through 2030, versus approximately 4% for

the Street. Because this growth is driven by durable ASP expansion, we confidently model 2030

revenue above consensus while actually forecasting fewer EUV units (92 versus the Street's 102),

meaning our bullish thesis does not rely on a volume melt-up.

Consensus continues to view supply constraints primarily as a limitation on unit growth. We see