**ASML: An Indirect But Very Real Beneficiary of the AI Memory Supercycle**
*By Hunting Alpha | 7.66K Followers*
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ASML’s DRAM memory supercycle is poised to drive a strong rebound in bookings and book-to-bill ratios. Leading DRAM manufacturers are adding substantial greenfield capacity, which demands more complex lithography processes—an area where ASML excels.
High-NA EUV technology is transitioning from research and development into commercial ramp-up. Intel and other key customers are preparing for the 14A and other advanced nodes. This progress supports an anticipated recovery in system sales beginning in late FY26 onwards.
With increasing volumes of High-NA EUV, ASML is expected to move closer to its FY30 gross margin target. As production scales up, the currently dilutive effect of High-NA EUV will diminish, improving the overall margin mix.
Currently, ASML’s valuation premium compared to major semiconductor equipment peers is near historical trough levels. Technical indicators also show a decisive bullish breakout against the S&P 500, signaling positive momentum.
China has recently contributed a significant share of ASML’s revenue. However, management expects demand from China to fall considerably in 2026, even as total FY26 sales remain at or above FY25 levels.
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### Performance Assessment: A Change in Perspective on ASML
I must admit I got ASML Holding N.V. (ASML) wrong initially. After revisiting my thesis, I am doing a complete 180-degree turn: the anticipated memory supercycle can lead to strong order book growth for ASML.
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### About the Author and Research Approach
I am a generalist investor aiming to provide alpha-generating investment ideas. My articles strive to deliver clearly structured, evidence-based theses across multiple sectors, focusing on perceived alpha potential versus the S&P 500. Typical holding periods for my investments range from several quarters to multiple years.
My research process includes maintaining comprehensive spreadsheets that track historical financial data, key metric disclosures, guidance trends, valuation comparisons, and relevant leading or coincident performance indicators.
Beyond analyzing company filings, I monitor industry news, reports, and third-party coverage. During significant events like CEO changes, I conduct deep dives into leadership backgrounds and past performances.
I rarely rely on long-term discounted cash flow (DCF) models as I find assessing a company’s delivery against five key drivers—revenues, costs and margins, cash flow conversion, capital expenditures and investments, and interest rates—more valuable.
For companies trading at very high multiples on trailing twelve months (TTM) or 1-year forward bases, I sometimes use reverse DCF analysis to understand the implied compounded annual growth rate (CAGR) expectations.
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### Disclosure
I/we do not currently hold any stock, options, or similar derivatives in ASML. However, I may initiate a long position through stock purchases or call options within the next 72 hours.
This article expresses my own opinions. I am not receiving compensation for it aside from Seeking Alpha. I have no business relationships with any company mentioned in this article.
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Past performance is not a guarantee of future results. No investment advice or recommendations are provided. Any views expressed may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank. Our analysts are third-party authors, including both professional and individual investors, who may not be licensed or certified by regulatory bodies.
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