The Dollar Impact: How DRAM and Logic EUV Dynamics Are Reshaping ASML's Profitability

ASML Holding ASML is experiencing a significant shift in its business economics as the semiconductor industry accelerates extreme ultraviolet (EUV) technology deployment. The company’s profitability expansion hinges on two critical factors: the speed at which EUV becomes the standard for advanced logic manufacturing and its growing role in next-generation DRAM production.

Understanding ASML’s Margin Engine

The core driver behind ASML’s expanding profitability lies in the superior pricing power of EUV systems compared to conventional deep ultraviolet equipment. When EUV shipments comprise a larger percentage of total sales, the company’s overall margin profile strengthens considerably. Recent financial performance underscores this dynamic—Q3 2025 saw gross margins reach 51.6%, representing an 80 basis-point year-over-year improvement fueled by robust EUV demand and a growing service revenue base.

Logic manufacturing has emerged as the primary growth pillar, representing approximately two-thirds of system revenues. Advanced nodes demand multiple EUV processing layers, which intensifies tool utilization and simultaneously drives demand for software enhancements and recurring maintenance services. These service contracts typically command significantly higher margins than first-time equipment sales.

DRAM: The Emerging Profitability Lever

DRAM manufacturing is increasingly becoming a margin-expansion opportunity as memory architectures advance. The surge in AI-driven applications has created explosive demand for specialized memory solutions like high-bandwidth memory and other HBM variants, which require denser process nodes. As DRAM manufacturers transition toward more sophisticated architectures, EUV technology becomes increasingly essential, creating incremental system demand at premium price points. This diversification helps reduce ASML’s reliance on lower-margin legacy tools and spreads revenue risk across technology generations.

The dollar-denominated value of DRAM-related EUV orders is expected to grow meaningfully in the coming quarters, supported by both memory capacity expansions and technological transitions across the industry.

Financial Outlook and Market Positioning

For Q4 2025, management has guided fourth-quarter revenues to range between €9.2 billion and €9.8 billion, representing a 26.3% sequential acceleration at the guidance midpoint. Gross margins are projected to stabilize in the 51-53% band, indicating a 40 basis-point sequential expansion at midpoint guidance. For the full 2025 year, the company expects sales growth of approximately 15%, with margins hovering near 52%, reflecting sustained customer demand across its installed base.

As EUV manufacturing scales and installed base revenues accumulate, ASML’s margin profile is positioned for gradual strengthening through 2026 and beyond.

Competitive Dynamics in Advanced Equipment Manufacturing

While ASML maintains an exclusive position in EUV lithography provision, the broader semiconductor equipment ecosystem includes formidable competitors. Applied Materials AMAT supplies deposition and etching solutions that enable both cutting-edge and mature node fabrication. As semiconductor complexity rises alongside AI workload requirements, Applied Materials’ portfolio addresses the critical need for efficient smaller-node processes.

KLA Corporation KLAC specializes in yield enhancement through process control, inspection, and metrology instrumentation. KLA’s systems help manufacturers detect defects and optimize yields during production, complementing ASML’s lithography role within the equipment supply chain.

Valuation Assessment and Investment Metrics

ASML’s share price has appreciated 33.3% over the past six months, outpacing the Computer and Technology sector’s 22.2% gain during the same period.

ASML Holding Six-Month Price Return Performance

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From a valuation perspective, ASML trades at a forward P/E multiple of 33.76, which exceeds the sector’s average valuation of 27.76—reflecting market expectations of above-average growth.

ASML Holding Forward 12-Month P/E Ratio

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Consensus earnings estimates suggest 2025 earnings growth of 39.3% year-over-year, moderating to 3.8% growth in 2026. Recent estimate revisions show upward movement for 2025 while 2026 projections have been trimmed, potentially signaling market caution regarding post-2025 growth sustainability.

ASML Holding maintains a Zacks Rank #3 (Hold) rating. Investors seeking growth exposure may explore [the current list of Zacks #1 Rank (Strong Buy) securities here](

Looking Ahead

The intersection of expanding EUV adoption in both logic and DRAM architectures positions ASML for sustained margin improvement. As technology penetration deepens and the company’s installed customer base broadens, the recurring revenue component—historically a higher-margin business segment—should continue to expand as a percentage of total revenues. This structural shift supports a more resilient and profitable long-term business model relative to legacy equipment cycles.

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