Chipmaking equipment giant ASML Holding NV (ASML.US) is scheduled to announce its fourth-quarter 2025 results on January 28, US Eastern Time. JPMorgan released a research report stating that, driven by orders from Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics, it expects ASML's fourth-quarter order intake to reach €7 billion, approximately 4% higher than the market consensus—which has already been revised upwards multiple times. The firm maintains its "Overweight" rating on ASML's US-listed shares with a price target of $1,518. This target implies an upside potential of about 20% from the stock's closing price on January 14. Notably, ASML's US-listed shares have already gained approximately 18% year-to-date.

Regarding ASML's fourth-quarter performance, JPMorgan expects quarterly revenue to be €9.503 billion (a year-on-year increase of 2.6% and a quarter-on-quarter increase of 26.4%), which is 0.6% below the market consensus and sits at the midpoint of the company's guidance range of €9.3-9.8 billion. In terms of profitability, the firm anticipates a gross margin of 51.8% (within the company's guided range of 51%-53%), aligning with market expectations; it also forecasts earnings per share of €7.50, consistent with the consensus view.

Concerning forward guidance, JPMorgan projects that ASML's revenue will grow by approximately 3.2% in 2026. While this figure could see upside potential depending on shipments to Samsung Electronics, the firm expressed skepticism that ASML would provide guidance matching the buyer-side consensus expectation of roughly 10% revenue growth for 2026. JPMorgan added that as long as the fourth-quarter order intake is strong, a less aggressive 2026 revenue outlook would still be viewed positively for the stock price.

JPMorgan pointed out that ASML's order intake for the first three quarters of 2025 showed a robust 26% year-on-year increase but still fell short of the levels seen in 2021 or 2022. Meanwhile, the fourth quarter of 2025 will be the last period in which ASML reports its order intake. This data point is set to be a key focus because 2026 shipments will be influenced by two factors: customers' failure to place orders earlier in 2025 and constraints on semiconductor capacity expansion due to extended cleanroom delivery cycles.

JPMorgan explained that the fourth quarter is typically the first period for securing orders for delivery two years ahead (Y+2). The majority of orders ASML books in Q4 2025 will be linked to shipments in 2027. Given the significant demand currently observed in the AI market, particularly in the DRAM/HBM sector, chip manufacturers are likely to book substantial volumes of ASML's equipment for delivery starting in the first quarter of 2027. Specifically, because capacity expansion in 2026 will be limited by prolonged cleanroom delivery cycles, manufacturers must prepare now for expansion in 2027.

JPMorgan further noted that TSMC has been the primary driver of ASML's order intake and shipments in 2025. Conversely, Samsung Electronics, which significantly reduced its lithography tool purchases in 2025, could emerge as the strongest driver of order growth for ASML in the future. SK Hynix and Micron Technology will also contribute to ASML's order growth; however, in absolute terms, the increase from Samsung Electronics might be the most substantial due to its existing cleanroom space that can be equipped.

JPMorgan also stated it believes TSMC will be proactive in ordering the necessary advanced process equipment required for the first half of 2027. Furthermore, JPMorgan holds the view that as the sole supplier of EUV lithography systems, ASML's market share in the lithography tool segment should exceed the 80%-89% range, driven by higher average selling prices for EUV machines. The transition to High-NA EUV is expected to begin around 2027, and increased adoption of EUV in DRAM manufacturing will similarly bolster ASML's position.

The environment in the memory chip industry has changed significantly over the past quarter, with DRAM prices rising substantially. Due to its business relationships with all major memory chip companies, ASML is positioned to be a significant beneficiary of this memory upcycle.