ASML is a company that we cover very closely at Rebound Capital, and it’s up ~23% since our buy rating in June’25 (3x return of S&P 500). While we do an earnings review after the company has reported its earnings, from this quarter onwards, we will be doing an earnings preview as well for the companies in our watchlist.
What does earnings preview mean?
It’s a structured framework used by hedge funds and institutional investors leading up to a company’s earnings to decide whether to own, short, or stay flat around the event. It also helps analyze how companies typically behave during earnings season and assess whether guidance and commentary matter more than headline EPS beats. As far as we can tell, this type of research has been inaccessible to retail investors — until now.
We will be sharing the following for the companies we are covering:
Intrinsic valuation model
Positive and negative catalysts
Backtests on stock behavior around earnings
Key metrics to focus on
Management commentary consistency and guidance
Analyst expectations and our take
As you can tell, this is aimed at short-term investors, swing traders, and institutional investors looking to profit from the earnings volatility. If you are a long-term buy-and-hold type investor, we highly recommend that you ignore the earnings fluctuations, and this subscription might not be for you.
While this report on ASML will be paywall-free, the earnings preview for other companies will be available only to our founding subscribers. Founding seats are available at $1,497/year, and upgrade instructions can be found here. If you already have an RC subscription, you will only be charged a pro-rated amount. Thank you for your consideration!
1. What’s ASML worth?
ASML’s intrinsic value is ~€982/share vs the current price of ~€836/share (stock price is in Euros). This translates to a potential upside of ~17% even with conservative estimates.
This is slightly lower than the 20% cutoff that we require at Rebound Capital to open our position1, and any further dip after the earnings will enable us to open a position on ASML with an adequate margin of safety. If you are a long-term investor, this quarter shouldn’t matter much, and any drop should be a good buying opportunity.
You can find our full assumptions and rationale in the attached valuation model.
2. Potential catalysts
Positive
Management gives reassurance of the economic uncertainty. Even with an earnings beat, the stock fell in the last earnings report due to weak guidance due to tariffs and geopolitical uncertainty.
Bookings stronger than expectation ($6.21 billion) and stronger traction on their latest EUV machine (High NA EUV). TSMC is doing well and even Samsung and Intel might be putting in new orders.
The current limit of training AI models are moving from compute (GPUs) to memory (RAM). Cutting edge memory chips require EUV machines and any guidance on this should be positive for ASML.
Negative
If the management guides to continued economic uncertainty (with the recent U.S. — China tariff issues), there won’t be any growth projected for next year. Any talk about further China restrictions can also be a negative catalyst.
Bookings fall short of the market’s expectation.
3. ASML — Expected vs Actual Move (%)
Over the last 8 quarters, only once did ASML actual stock price move was within the expected range. The management is usually conservative in the call and in 6/8 quarters, the stock dropped more than ~5% following the earnings call. Funnily enough, the company has beat consensus EPS in 6 of the last 8 quarters.
For the upcoming earnings call, the expectation is +/- 6.5%
4. Key metrics to look out for
ASML’s trades on the below metrics (in decreasing importance) around earnings:
Long Term 2030 Guide: Any change in ASML’s 2030 guidance will materially move the stock. They have currently guided total revenue between €44B and €60B in 2030. We don’t expect any change to this guidance in the earnings report.
FY26 Guide: Last quarter, ASML’s stock fell due to the management guiding that ASML’s revenue may not grow in 2026, due to economic uncertainty. Management’s update on the FY26 guidance will be closely monitored.
Bookings: Around earnings reports, ASML’s stock moves are usually due to the bookings that they report. They will stop giving this number in 2026 as the management believes that bookings are lumpy and can mislead investors. In our estimate, the market will react positively to bookings >€6B in the quarter (Consensus is €5.36B according to Visible Alpha). This is based on the simple fact that ASML reports ~€5.5B in System Sales per quarter. We need bookings to be higher than the system revenue to be able to grow ASML’s order book.
Gross Margin: ASML’s GM% is expected to improve to 58% by 2030, from ~52% currently. This is because, as a monopoly they are expected to be able to charge a higher price from their customers in the coming years. The improvement or lack of in GM% will show if they are being able to effectively negotiate pricing with TSMC. The market was concerned about ASML’s pricing power versus a very large customer like TSMC.
5. Management consistency
The management has consistently been conservative. Few pointers towards the same:
Conservative 2030 Guidance: The management has given a wide range (€44B and €60B in 2030) for the 2030 revenue guidance. This guidance was given in 2024.
Conservative 2026 Revenue Growth Guidance: Companies right across the AI stack are aggressively investing (OpenAI’s Capex) and guiding (Oracle’s 4 year out backlog). But the company without which none of this would play out (ASML!) has guided a possible revenue degrowth in 2026. We feel that this is a conservative guide and the management could update us positively in the coming earnings report.
Management never hypes AI in its calls: Our take is that ASML’s management will under promise and over deliver. The market is likely to react positively on the earnings if the management talks about growth in 2026.
6. Analyst expectations and our take
We expect that this quarter’s results and bookings will be over looked by the market. The market will instead focus on the 2026 revenue growth guidance by ASML. We expect:
ASML will cite improving demand for AI chips (compute and memory)
ASML will guide to growth in 2026 and the stock will react positively to this
Long Term (2030) outlook to remain the same
Overall, we expect ASML’s stock will react positively to the FY26 guidance and trade slightly up (~+5%) on the earnings report. There is no large upside catalyst that the market is ignoring and which will be revealed on the earnings.
Risk: The biggest risk to earnings is ASML’s potential guidance that expanded China export restrictions will prevent revenue growth in FY2026 (ASMLs management is super conservative). But, the potential impact of the China restrictions is widely known and should not significantly surprise the market during this earnings announcement. Crucially, any lost revenue from China is expected to be more than compensated for by the emerging Memory super cycle, as the production of the latest memory chips relies heavily on ASML’s DUV and cutting edge EUV lithography machines.
I hope you found this interesting. As a reminder, to get our reports on the rest of the companies we are covering, please consider upgrading your subscription to founding.