Key Takeaways
- ASML stock is up 1% today as investors digest a record quarter showing AI demand now exceeds its planned capacity.
- Q3 sales hit a record €11.7 billion with a 57.5% gross margin, and 2026 guidance rose to €44 billion to €45 billion.
- Demand outruns planned 2027 and 2028 supply, while a proposed U.S. bill could restrict DUV sales and servicing in China.
- Watch whether Q4 sales land between €14.2 billion and €15.2 billion, which would show the capacity ramp is working.
ASML Holding (ASML) stock is up 1% today as investors keep digesting a record third quarter.
Demand is no longer the question for ASML. The harder question is whether it can build machines fast enough.
A record quarter and a raise
ASML makes lithography machines, the tools that print circuit patterns onto silicon wafers. The third quarter delivered on every front:
- Total net sales of €11.7 billion, toward the high end of guidance
- A 57.5% gross margin and €5.0 billion in net income
- €3.3 billion from Installed Base Management, its service and upgrade business
Management also lifted its 2026 sales outlook to €44 billion to €45 billion. That jump looks even bigger in the annual sales trend…
Sales were €28.3 billion in 2024, so the new 2026 midpoint implies roughly 57% growth in two years.
Capacity is the new constraint
ASML said AI-driven demand now exceeds the supply it planned for 2027 and 2028. It had planned 30% capacity increases in each year, yet management says that will not be enough.
Customers are asking about slots in 2029 and 2030. So ASML is shortening assembly times and selling higher-throughput upgrades for tools already in the field.
That richer mix shows up in profitability…
Against that history, Q3’s 57.5% gross margin stands out. It rose from 54.0% in Q2, and management expects about 56% for the full year.
Washington is the wildcard
The harder risk is policy. CFO Roger Dassen opposed the proposed U.S. MATCH Act, which would restrict DUV sales and servicing in China.
DUV, or deep ultraviolet, is ASML’s older workhorse technology. Dassen argued the bill could speed up Chinese alternatives, though he was optimistic that “common sense will prevail.”
Investors are paying a premium for ASML’s visibility…
ASML trades at 25.3x forward earnings, compared with 23.0x for Applied Materials. At $1,651, the stock sits below its $1,988 52-week high, while the average analyst target is $2,363.
My take: ASML has the clearest demand visibility in chip equipment, and the premium looks earned. Still, execution and Washington now matter more than orders.
The next checkpoint is Q4, where sales of €14.2 billion to €15.2 billion would prove the ramp is working.
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