ASML, AI Enters the Factories

Q2 2026 Results: Revenue, Earnings and Guidance Raised

In the space of twelve months, ASML has moved from uncertainty to conviction. The Dutch group closed the second quarter of 2026 with €9.3 billion in revenue and €2.9 billion in net income, raised its full-year guidance to a range of €43–45 billion, and has already filled its order book almost entirely through to 2027.¹ In plain terms: the artificial intelligence boom is moving beyond data centres and into the fabs that manufacture chips.

A step back. In July 2025, ASML had disappointed the market: orders were solid, but management remained cautious on revenue growth for 2026, weighed down by tariffs, trade restrictions and uncertainty over chipmakers' capital expenditure plans. The stock fell more than 10%.⁵ A year on, the picture has changed markedly: gross margin (the share of revenue remaining after production costs) rose to 54%, the full-year outlook was revised from the €36–40 billion range to €43–45 billion, and third-quarter revenue alone is projected at €11–12 billion. On the day of the earnings release, the stock gained nearly 4%.

The detail that matters more than any single trading session is timing. ASML's customers are committing capital today for machines they will not receive for two or three years: EUV capacity earmarked for 2027 is already almost fully booked, even as the company has decided to increase it by 30%, and a significant volume of new requests for 2028 has already come in.³ In practical terms, the order book signals what the semiconductor industry expects to need to produce for years to come.

What ASML does and why it matters

When artificial intelligence comes to mind, the conversation tends to turn to large language models, Nvidia's graphics cards, and the billions invested by Microsoft, Amazon, Alphabet and Meta in data centres. ASML sits one layer deeper in the same story.

The Dutch company manufactures the machines that print circuits onto wafers — the silicon discs from which chips are produced. It is the world's sole manufacturer of EUV (Extreme Ultraviolet) lithography systems, the equipment essential for producing the most advanced chips. Its customers are the names that fabricate semiconductors for everyone: TSMC, Samsung, SK Hynix, Micron and Intel.

To put it plainly: when these companies place an order with ASML, they are committing to building or expanding a production line and deploying capital for years, well beyond the needs of the next quarter. Management notes that chipmakers have secured long-term contracts from their own customers, and that this visibility — described as "unprecedented" — is prompting them to accelerate investment with greater conviction.

In the chart below, we observe where ASML's revenue originates: logic chips remain the largest segment, while memory and services are broadening the demand base.

Chart 1 · Revenue by end use

ASML net revenue by end use (2022–2026, through Q2)

Billions of euros · Services (Installed Base Management), Logic, Memory

Advance orders and expanding capacity

Demand is growing on two fronts. In logic chips (the "brains", such as processors), customers are adding capacity on the most advanced nodes already in production — 5, 4 and 3 nanometres — while racing towards 2 nanometres; the "nanometre" measures process fineness, and the smaller the number, the more advanced the chip. For 2026, ASML estimates approximately 25% revenue growth from advanced foundry logic.

The picture is even stronger in memory. The expansion of data centres is driving demand for HBM (High Bandwidth Memory, the ultra-high-speed memory chips that work alongside AI processors), and additional supply is also needed for conventional memory. Since each new generation requires more process steps with the machines, ASML expects memory-related revenues to rise by 75% in 2026. The bottom line is this: more chips to manufacture and more complex chips to process, meaning more ASML machines.

This is why the company is ramping up production. In 2026 it plans to deliver approximately 65 current-generation EUV systems; for 2027 it aims to expand capacity by around 30%, towards 85 units, and is evaluating a further 30% increase in 2028, which would bring capacity to approximately 110 systems. Production of DUV immersion machines — less advanced technology but still essential for many chips — is also growing in parallel: a sign that capital investment is touching the entire industry, from leading-edge to more mature process nodes.

In the chart below we observe how machine sales were distributed in the second quarter: by technology, by chip type and by geography.

Chart 2 · Systems Sales Breakdown

ASML systems sales by technology, end use and geography (Q2 2026)

Percentage shares · comparison with Q1 2026

The hidden treasure: services and High-NA

Part of the better-than-expected result comes from an inconspicuous line item: aftermarket services. The services division (known within ASML as Installed Base Management — covering maintenance, spare parts and upgrades for machines already sold) contributed €2.8 billion, approximately €300 million above expectations, and is forecast to grow by more than 30% in 2026.

This is the hallmark of the ASML business model: every machine sold generates immediate revenue and, at the same time, expands an installed base that continues to produce recurring revenues over the years, at high margins. In plain terms, the company sells the equipment once and then milks it for years through servicing and upgrades.

On the same day as the results, a significant technology milestone was also announced. Intel used the new High-NA EUV machine to manufacture some of its processors (codenamed Panther Lake), bringing them into high-volume production.² High-NA is the next generation of EUV lithography: the greater numerical aperture (NA) enables finer and more precise pattern definition, in some cases reducing the number of process steps required.

In the image below we observe a High-NA EUV system on an actual fab floor: this is the machine with which Intel qualified certain steps of its 18A process node.

Image · High-NA EUV Milestone

High-NA EUV enters high-volume manufacturing with Intel

High-NA platform qualified on selected layers of the Intel 18A process (Panther Lake)

A word of caution, however: this is an initial real-world case, and broad-based adoption remains some way off. TSMC, for example, maintains a cautious approach given the high costs and continues to use current-generation EUV machines on its most advanced process nodes.⁴ For the next few years, the primary economic drivers remain today's machines, DUV systems and upgrades; High-NA is primarily the growth lever for the second half of the decade.

China, risks and the share price

Export restrictions prohibit ASML from selling its most advanced machines into China. The group can, however, supply less sophisticated equipment, used primarily for chips destined for the domestic Chinese market. China is expected to account for approximately 20% of 2026 revenues — the same percentage as before, but on a higher revenue base, meaning sales in absolute terms continue to grow.

Here lies the most evident risk: political risk. New American or European restrictions could curtail what ASML is permitted to sell or service, and relocating a facility from one region to another requires time, capital, and regulatory approvals. There is also execution risk: expanding capacity by 30% means persuading thousands of suppliers to ramp up production and installing machines that may take months to reach full operational output. And there is cycle risk: if customer spending were to soften after 2028, ASML would find itself with infrastructure calibrated to a longer cycle than the one that actually materialises.

In the chart we observe the performance of ASML's share price: following the extended rally of recent months, the quarterly results arrive with the stock trading near its highs and a recent phase of retracement.

Chart 3 · Share Price

ASML Holding — daily price (Euronext Amsterdam)

Euro · multi-year trend through July 2026

The stock market valuation, too, demands that growth continues. Ahead of the results, ASML was trading at around 35 times its projected 2027 earnings: a multiple (the ratio of price to earnings) that already embeds a substantial portion of future expansion. The quarterly results extend forward visibility and dispel some uncertainty; what remains, however, is the requirement that the AI boom eventually generate tangible returns throughout the entire supply chain.

ASML, the AI Barometer

ASML occupies a singular position in the technology landscape. Nvidia speaks to demand for accelerator chips; the major cloud groups speak to the build-out of data centres; utilities reflect rising power consumption. ASML signals how much productive capacity the semiconductor industry believes it needs to construct in order to meet that demand: a slower-moving indicator, but a more structural one.

The €9.3 billion in revenues and €2.9 billion in net profit reflect what has already occurred. The decision to increase production capacity by 30%, combined with an order book nearly sufficient to cover 2027 and already substantial for 2028, reflects instead what the industry is preparing for.

Final Assessment

Let us begin with the fundamentals — that is, the quality of the business. The quarterly results reaffirm an exceptional profile: ASML is the world's sole supplier of EUV lithography systems, its gross margin has risen to 54%, and its installed base of machines converts each sale into recurring service and upgrade revenues, expected to grow by more than 30% in 2026. It is a dual-engine business: the machine generates the initial receipt, while servicing extends that revenue stream over the years. The visibility that management describes as "unprecedented" shifts the centre of gravity of risk: demand is now covered at least through 2027, and the true challenge has become delivering production on schedule.

Turning to valuation — that is, to price. The stock already reflects a great deal: ahead of the results, it was trading at around 35 times projected 2027 earnings. Based on consensus estimates compiled by S&P Global Market Intelligence, revenues would rise towards €50 billion in 2027 and €56–57 billion in 2028, with earnings per share growing from approximately €34 in 2026 towards €44 and €55 in the two subsequent years.⁶ Should these estimates materialise, the price-to-earnings ratio would gradually compress — from approximately 45 times on 2026 earnings towards 28 times on 2028 earnings — converting what today appears expensive into a growth story. The conditional tense is warranted: the current valuation leaves little room for disappointment.

Risks remain real and must be kept distinct. The first is execution risk: expanding capacity by 30% — with a potential further +30% in 2028 — commits thousands of suppliers and extends installation lead times. The second is cyclical risk: should AI monetisation disappoint after 2028 and major customers cut back investment, the company would find itself with an oversized cost base. The third is geopolitical: fresh restrictions on China would affect approximately 20% of 2026 revenues and related services.

Attempting to order the scenarios, with purely indicative probabilities — subjective weightings intended to frame the risk rather than predict it. The base case, the most likely (around 55–60%), sees 2027 orders confirmed, execution on schedule and AI-driven demand continuing: revenues at the upper end of the €43–45 billion range and multiples compressing in an orderly, expected fashion. The bull case (20–25%) adds High-NA acceleration beyond the Intel engagement and stronger-than-expected HBM memory demand: in this scenario, consensus estimates would be revised upward. The bear case (around 20%) combines a slowdown in customer spending after 2028, or additional China export tightening, with multiple contraction.

Key indicators to watch over the coming quarters: EUV orders for 2028 and the decision on whether to confirm the additional +30% capacity increment; adoption signals from TSMC on High-NA, where the foundry has so far remained cautious; the revenue trajectory of the China segment under export restriction constraints; declared capital expenditure by the major cloud groups, which remains the true upstream driver; and gross margin progress towards the 55–57% range guided for the third quarter.

The bottom line is this: the quarterly results shift ASML from promise to execution. AI-related demand has translated into orders arriving ahead of schedule and production capacity already booked; risk has diminished on the demand side and migrated to supply and valuation. In all likelihood, the next verdict will come from 2028 order intake and the supply chain's ability to deliver on time: it will be that, more than any single quarter, that determines whether the premium the market currently assigns is justified.