The US stock earnings season kicks off, and the "AI faith" faces its first major test! After a surge, ASML stands in the global spotlight

According to Zhitong Finance APP, as the earnings season for U.S. stocks, which global investors are focusing on, officially kicks off on Tuesday, the lithography giant ASML Holding NV faces a very challenging "earnings test." Previously, the stock surged nearly 50% in just over a month, mainly due to global financial market investors' hopes that the accelerated construction of artificial intelligence infrastructure will drive significant expansions in 3nm and below chip production capacity by manufacturers like TSMC, thereby leading to a surge in semiconductor equipment orders. As a result, ASML's best monthly stock performance in twenty years has made the earnings report to be released tomorrow a focal point for the global financial market.

Latest stock market data shows that ASML's U.S. ADR (ASML.US) has risen by as much as 45% since 2025, with a more than 40% increase since September. The rise in European stock markets has been slightly less than that in the U.S. market. Since September, driven by the "more expensive new generation EUV lithography machine—High-NA lithography machine moving from laboratory validation to deployment in chip manufacturing" and investment in Mistral AI, ASML's stock price has significantly entered an upward trajectory, with ASML's U.S. ADR hovering around $984 and its European stock around €840.

The semiconductor equipment manufacturer headquartered in the Netherlands regained the title of the highest market capitalization listed company in Europe in September and recorded its best monthly performance in twenty years. In the past two months, at least four Wall Street financial institutions have upgraded their stock ratings and target prices for ASML; especially after the performance outlook for its most critical chip manufacturing clients, Intel Corp. and Samsung Electronics Co Ltd., significantly improved, institutions have generally turned more bullish.

What details is the market focusing on regarding ASML's performance?

Ahead of the key earnings report on Wednesday, the critical question under the heightened expectations is whether ASML's management can provide a stronger 2026 performance guidance than in July. With the resurgence of U.S.-China trade tensions adding uncertainty to the market, investors are also actively seeking more clues that can prove semiconductor equipment manufacturers can profit significantly from this unprecedented AI boom.

"The market will focus on ASML's 2026 performance outlook—investors now hope to see whether the aggressive capital expenditures related to high-performance AI chips from chip manufacturers like TSMC and Samsung Electronics have begun to translate into orders for semiconductor equipment giants like ASML," said Reinder Wietsma, portfolio manager at Centive Global Equity Fund ASML is the world's only supplier of EUV lithography equipment necessary for manufacturing the most advanced process AI chips. In July, it stated that due to global trade frictions, it could not confirm its performance growth expectations for 2026, which caused its stock price to drop 11% on the day of the earnings report, dragging down its peers in the chip sector. Subsequently, an agreement between the United States and the European Union exempted strategic items, including semiconductor equipment, from tariffs, clearing a cloud for its U.S. customers to place orders. Coupled with the ongoing global wave of AI infrastructure construction, this has continued to drive up the stock prices of semiconductor equipment manufacturers like ASML.

However, the recently significantly escalated U.S.-China trade war still poses interference and threats to ASML's fundamental expectations. ASML is highly dependent on rare earth materials from China; after the Trump administration expanded the scope of sanctions to include subsidiaries of blacklisted companies, the risk of tightening restrictions on ASML's shipments of mature process lithography equipment to the world's second-largest economy is significantly increasing.

There are also concerns that Chinese chip manufacturers, after years of stockpiling lithography equipment, may reduce related expenditures.

Investor sentiment has recently been boosted mainly by signs of performance recovery from ASML's two major customers—Intel and Samsung Electronics. Intel has received substantial investments from "AI chip giant" NVIDIA and the U.S. government, providing it with the potential to enhance future capital expenditures. Meanwhile, with the unprecedented product combination of x86 and NVIDIA GPUs, the demand for x86 architecture CPUs and NVIDIA AI GPU computing clusters in the future chip supply chain is bound to surge.

Samsung's underperforming chip foundry business is turning around, having secured orders to manufacture AI and FSD high-performance chips for Tesla Inc., led by Musk, at a large chip manufacturing plant soon to be completed in Texas, which will require more investment. Meanwhile, more media reports indicate that Samsung's advanced memory chips have been approved for use in NVIDIA's Blackwell flagship AI server clusters.

Despite the recent positive news flow from Samsung, a key uncertainty remains: whether Samsung can also obtain approval for the next-generation HBM4 memory chips from NVIDIA, which is seen as a potential swing factor for ASML's order surge starting next year.

Simon Coles, an analyst at Barclays, stated that the fundamental outlook for these two companies may not improve quickly enough to help ASML's lithography machine bookings in the third quarter. He noted that Intel may have already locked in all the EUV lithography machines it needs, while Samsung's foundry division—despite its improved outlook—"is unlikely to become a significant contributor to orders in the short term."

According to data compiled by institutions, the implied volatility of ASML ADR options after earnings could reach as high as 7%, marking the second-largest expected volatility in three years.

The market expects the unprecedented AI boom to continue providing positive catalysts for ASML's stock price.

For investors, after a recent strong rally, ASML's valuation no longer appears cheap. Based on the two-year forward earnings per share valuation—due to the long delivery cycle of its advanced EUV equipment, this is a key indicator—the stock's forward P/E ratio has risen to 28x, higher than the average level of 27x over the past five years According to statistics from JP Morgan's professional sales desk, the recent rise of ASML's American Depositary Receipts (ADRs) has been primarily driven by hedge fund buying, while most long-term bullish investors remain on the sidelines. Although the market may welcome the improvement in ASML's prospects for 2026, long-term bulls are concerned that "ASML's management may still disappoint investors in terms of order outlook clarity."

Wall Street financial giant Wells Fargo recently released a bullish research report on the semiconductor equipment industry, stating that as global AI infrastructure construction led by tech giants like Microsoft, Google, and Meta heats up, it will significantly accelerate the expansion of advanced process chips at 3nm and below, as well as advanced packaging capacity. The long-term bull market logic for the semiconductor equipment sector remains very robust. ASML is one of Wells Fargo's long-term favored semiconductor equipment stocks.

Wells Fargo stated that all news related to catalyzing advanced process AI chip capacity is positive and constructive for semiconductor equipment. The firm noted that the architecture updates are much more complex and the performance of CPU/GPU packaging is stronger (based on NVLink interconnect, as well as CoWoS/EMIB/Foveros and other chiplet advanced packaging), which will significantly boost structural demand for EUV/High-NA lithography machines, advanced packaging equipment, and measurement and inspection, particularly benefiting ASML, Applied Materials, and KLA.

Wells Fargo reiterated its "Overweight" rating on ASML ADRs, raising the target price significantly from $890 to $1,105. The firm emphasized that the demand for ASML's High-NA lithography machines in the 2nm process era will be a strong driving force for ASML's performance and stock price growth. Driven by the strong expansion of High-NA (high numerical aperture) EUV lithography machine demand led by chip manufacturing giants like SK Hynix, TSMC, Samsung, and Intel, High-NA is moving from the initial verification stage to the chip manufacturing deployment stage, and ASML is expected to return to a "strong compound growth" trajectory.

Additionally, one of the long-term concerns from some institutions regarding ASML is that it is competing for capital investment with other core links in the chip manufacturing process, as the more expensive advanced process lithography equipment is no longer the only component needed for manufacturing more powerful chips in terms of performance and architecture.

Richard Clode, a portfolio manager from Janus Henderson, stated that he has recently been increasing his holdings in semiconductor equipment companies but is more focused on those producing equipment related to deposition and etching processes.

Compared to semiconductor equipment companies, he prefers stocks that can directly benefit from the wave of AI infrastructure spending, such as Nvidia and HBM memory chip manufacturers. "I still believe that (equipment) is not as strong as more direct computing or storage targets, and the equipment spending cycle has also been distorted by geopolitical situations and China's recent hoarding of equipment." "Clode stated in an email