ASML Holding’s ASML margin trajectory is increasingly linked to the pace of extreme ultraviolet (EUV) adoption across logic and DRAM manufacturing. EUV tools are among the most complex systems in the semiconductor industry and typically carry much higher selling prices than deep ultraviolet tools. As a result, a higher mix of EUV shipments can meaningfully influence profitability over time.
In the third quarter of 2025, ASML Holding’s gross margins expanded 80 basis points year over year to 51.6%, supported by steady EUV demand and a growing installed base business. Logic customers remain the largest driver, accounting for roughly two-thirds of System sales. Advanced logic nodes require multiple EUV layers, which raises tool utilization and increases demand for software upgrades and services. These recurring revenues tend to carry higher margins than initial system sales.
DRAM is becoming a more important margin lever as well. AI-related memory, such as high-bandwidth memory, requires more advanced process steps. As DRAM makers move to denser architectures, EUV adoption rises, supporting higher-value system demand. This shift helps balance exposure away from lower-margin legacy tools.
We believe that deeper EUV penetration in both logic and DRAM supports a more profitable business mix for the company over the long term. As EUV volumes scale and service revenues increase alongside a larger installed base, ASML’s margin profile should gradually strengthen.
For the fourth quarter of 2025, ASML Holding expects revenues to be between €9.2 billion and €9.8 billion, a 26.3% sequential increase at the midpoint. The company also anticipates gross margins of 51-53%, indicating a 40-basis-point sequential improvement at the midpoint. For the full-year 2025, management projects sales to improve around 15%, with margins of nearly 52%, showing sustained demand for ASML’s products.
ASML’s Rivals in Advanced Chipmaking Equipment Space
Although ASML is the only company providing EUV lithography tools, it operates in a broader ecosystem of semiconductor equipment makers. Its notable peers in the chipmaking equipment space are Applied Materials AMAT and KLA Corporation KLAC.
Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. As chips become more complex with AI and high-performance workloads, Applied Materials’ tools aid in designing and making efficient and smaller node chips.
KLA Corporation specializes in process control, inspection and metrology systems. KLA Corporation’s equipment helps chipmakers monitor and improve yield during manufacturing.
ASML’s Share Price Performance, Valuation and Estimates
Shares of ASML Holding have risen 33.3% in the past six months compared with the Zacks Computer and Technology sector’s gain of 22.2%.
ASML Holding Six-Month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, ASML trades at a forward price-to-earnings ratio of 33.76, significantly higher than the sector’s average of 27.76.
ASML Holding Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ASML Holding’s 2025 and 2026 earnings implies a year-over-year increase of approximately 39.3% and 3.8%, respectively. Estimates for 2025 have been revised upward in the past 30 days, while those for 2026 have been revised downward during the same time frame.
Image Source: Zacks Investment Research
ASML Holding currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
