JP Morgan is bullish on ASML Holding NV ADR (ASML.US): After Q3 earnings, market focus will shift to the 2027 fiscal year. They recommend "buying on dips."

J.P. Morgan recently released a research report focusing on the upcoming third quarter (3Q25) earnings of ASML Holding NV ADR (ASML.US) to be announced next week, stating that the opportunities after the earnings release outweigh the risks. The market focus is likely to shift to the fiscal year 2027 (FY27) after the earnings release, and they reiterated their "overweight" rating on ASML Holding NV ADR and its status as a "preferred target". Key Points and Earnings Risk Warning The firm stated that since ASML Holding NV ADR mentioned during the last earnings conference that they are still preparing for growth in 2026 but cannot confirm the situation, their stock price has dropped by 43%. Therefore, the two major risks facing this earnings are: lower-than-expected order volume for the third quarter of 2025, or lower-than-expected financial guidance for FY26. Due to the cautious attitude shown by ASML Holding NV ADR at the beginning of this quarter, the firm's expectations for the order volume for the third quarter of 2025 are lower than the market consensus. However, with the easing of tariff pressures, the firm believes that Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR may show strong order volume in the latter half of this quarter, which means that the actual order situation of ASML Holding NV ADR may be better than expected, depending on Samsung's actions. Samsung has been delaying equipment orders for the Pyeongtack P4 fab. The company still has a backlog of previous delayed orders, so there is no need to place new orders, just activate these backlogged orders to meet the delivery needs for 2026 (although eventually new orders will still be needed). It is because of the uncertainty in the timing of Samsung's orders that the firm has lowered its order expectations. Meanwhile, due to the strong performance of the storage market, the firm remains optimistic about ASML Holding NV ADR stock. If the financial guidance for FY26 provided by ASML Holding NV ADR is lower than the current market consensus, the firm believes that this will be the last negative newsafter the October 15 earnings guidance announcement, the market focus will shift to the expectations for FY27. Therefore, if the order/sales guidance for FY26 in the earnings report appears weak, the firm recommends buying on dips. On the other hand, strong order volume and financial guidance for FY26 will be a positive factor for the stock price. Despite the short-term risk of a pullback before the earnings release, considering that both potential outcomes (strong or weak guidance) will have a positive impact on the stock in the medium to long term, the firm believes there is no reason for investors to take profits before the earnings report. The firm reiterated its "overweight" rating on ASML Holding NV ADR and its status as a "preferred target". Third Quarter (3Q25) Earnings Expectations ASML Holding NV ADR is set to release its third-quarter earnings on October 15, and the firm's expectations for key financial indicators are as follows: Revenue: Expected to reach 7.568 billion, representing a 1.6% decrease from the previous quarter and a 1.3% increase year-over-year. This figure is 1.5% lower than the market consensus but in line with the guidance range of 7.4-7.9 billion provided by ASML Holding NV ADR (with the midpoint at 7.65 billion). Order volume: Expected to reach 3.92 billion, 21.1% lower than Bloomberg's consensus expectationsreflecting the firm's conservative view due to the low predictability of quarterly orders; this figure is also 22.4% lower than the buyer consensus of 5.05 billion collected by the firm (see relevant sections in the report for details). Profitability: Gross margin is expected to be 51.1% (ASML Holding NV ADR guidance range is 50%-52%), in line with market consensus expectations; EBIT (Earnings Before Interest and Taxes) is expected to reach 2.331 billion (profit margin of 30.8%), 3.4% lower than market consensus expectations (a decrease of 60 basis points); Earnings Per Share (EPS) is expected to be 5.17 per share, 3.0% lower than market consensus expectations. The firm expects ASML Holding NV ADR to provide guidance range for the fiscal year 2026 in the third-quarter earnings report. Given the improvement in the storage market since the last earnings release and the positive news in the logic semiconductor market, the guidance for FY26 should be more favorable than the company's comments on FY26 in the previous quarter.