ASML Holding Before Q4 Earnings: How Should Investors Play the Stock?

ASML Holding N.V. ASML is slated to report fourth-quarter 2025 results on Jan. 28, before market open.

ASML expects revenues between €9.2 billion and €9.8 billion. The Zacks Consensus Estimate is pegged at $11.06 billion, representing a 11.9% increase from the year-ago quarter’s level.

The Zacks Consensus Estimate for earnings is pegged at $9.01 per share, up 23.4% from the year-ago quarter’s earnings of $7.30. The estimate has been revised upward by 5 cents over the past seven days.

In the last reported quarter, ASML Holding’s earnings of $6.41 per share beat the consensus mark by 2.2%. The company’s earnings outpaced the Zacks Consensus Estimate thrice in the trailing four quarters while missing on one occasion, the average negative surprise being 4.1%.

Earnings Whispers for ASML Stock

Our proven model predicts an earnings beat for ASML Holding this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.

Earnings ESP, which represents the difference between the Most Accurate Estimate ($9.19 per share) and the Zacks Consensus Estimate ($9.01 per share), is +2.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: ASML carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Likely to Influence ASML’s Q4 Results

The semiconductor sector is riding on a wave of resurgence, fueled by surging demand and the transformative potential of artificial intelligence (AI). This positive momentum has been a boon for companies like ASML, particularly in the wafer fabrication equipment space.

ASML Holding has been at the forefront of technological innovation, benefiting significantly from the industry’s shift toward smaller, more advanced technology nodes. These nodes are essential for building cutting-edge digital infrastructures that support AI, 5G and high-performance computing. The increasing complexity of chip designs has made ASML's state-of-the-art lithography tools indispensable to chipmakers.

In both logic and memory markets, the demand for ASML’s lithography tools continues to climb. The ongoing transition to next-generation memory technologies, such as DDR5 and high-bandwidth memory, is a tailwind for the company. With DRAM manufacturers ramping up technology upgrades, ASML Holding is likely to have witnessed strong momentum in the fourth quarter, driven by heightened memory demand.

ASML’s heavy investments in Extreme Ultraviolet (“EUV”) technology are also paying off. EUV lithography is critical for producing advanced chips, and the company’s service segment is benefiting from the rising demand for EUV-related services. In particular, the growing popularity of the NXE:3800 low numerical aperture (NA) machine, which can process 220 wafers per hour, is likely to have driven substantial EUV sales in the to-be-reported quarter.

ASML’s Price Performance, Valuation and Estimates

Shares of ASML have gained 90.3% in the past six months compared with the Computer and Technology sector’s growth of 14.4%. The company has outperformed its peers, Applied Materials AMAT and KLA Corporation KLAC, while underperforming Lam Research LRCX in the same time frame.

ASML 6-Month Performance Chart

From a valuation standpoint, ASML trades at a forward price-to-sales ratio of 13.12X, higher than the sector’s average of 7.32X.

ASML Forward 12-Month (P/S) Valuation Chart

Investment Thesis for ASML Stock

AI-driven semiconductor demand is on the rise as global enterprises move toward an AI-future. For ASML, the AI-trend has become the primary growth driver as customers demand semiconductor manufacturing equipment for logic and memory chips for AI workloads, high bandwidth memory and DDR5, keeping system demand structurally strong.

Since ASML holds a near-monopoly in EUV technology, crucial for the world’s most advanced chips at 3nm and below, it benefits from extraordinary pricing power and strategic importance. Major customers like TSMC, Samsung and Intel rely on ASML’s systems to stay ahead in chip innovation.

ASML’s venture into sub-2nm production with High Numerical Aperture (High-NA) EUV systems is the next technological leap for chipmakers. This technology will provide ASML with long-term potential as the industry moves toward denser and more efficient chips. ASML’s High-NA machines will be central to that shift.

ASML is effectively the sole player in lithography system upgrades for its own installed base, especially in EUV space. However, in the broader semiconductor equipment market, ASML competes with companies like Lam Research, KLA Corporation and Applied Materials. Lam Research is an established wafer fabrication equipment manufacturer that is established in the memory space.

Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. KLAC’s advanced packaging solutions are also experiencing robust traction on the back of AI and high performance computing. However, in the lithography space, especially in EUV space, ASML is the undisputed leader.

Final Thoughts: Buy ASML Stock for Now

ASML Holding’s dominance in EUV and High-NA EUV technology, along with solid revenue visibility, makes it well-positioned for future growth. With rising demand for advanced nodes, AI chips and high-bandwidth memory, ASML’s lithography tools will remain mission-critical. Considering these factors, we suggest that investors should buy ASML stock.

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This article originally published on Zacks Investment Research (zacks.com).

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