European equities tumbled sharply when investors digested renewed U.S. tariff threats, and ASML shares fell by roughly 3.7% in Monday trading. The drop was one of the steepest among large-cap exporters listed in Amsterdam, reflecting concerns that even a 10% levy on machinery exports to the U.S. could shave 3%–3.5% off Germany’s GDP contribution from high-tech equipment makers. ASML’s reliance on exports—more than 70% of its revenue comes from the U.S. market—means any escalation in trade tensions materially threatens its top-line growth for 2026.

Despite the short-term sell-off, ASML remains the sole supplier of extreme ultraviolet (EUV) lithography tools, and order momentum has surged. In the first quarter, the company booked 15 EUV systems—up from 9 in the same period last year—driven by aggressive capacity expansion at leading AI data centers. Management has guided for 60 to 65 EUV tool deliveries in 2026, compared with 45 in 2025, underpinning projected equipment revenue growth of over 30% year-over-year.

A survey of nine sell-side analysts shows a median projected share price gain of 50% over the next 12 months, driven by continued AI chip demand and a constrained competitive landscape. Although the stock has already appreciated by about 80% over the past year and by 17% year-to-date, most forecasters argue that the long-cycle nature of lithography capital spending and limited alternative suppliers justify further multiple expansion. Key assumptions include a sustained semi capex increase of at least 10% annually and no major macroeconomic disruptions.

ASML trades at approximately 45 times forward earnings, a premium to its historical multiple of around 35, reflecting its virtual monopoly on EUV. While the current valuation implies lofty expectations, Goldman Sachs and JPMorgan reckon the company’s strong free cash flow conversion—projected at 60% of operating profit—and a net cash position equivalent to 10% of market cap provide a buffer against macro risks. Still, any escalation of U.S. tariffs to 25% by mid-year could force customers to delay orders or seek alternative capacity, posing a material downside to consensus forecasts.