Key Takeaways
- ASML beat Q2 guidance with €9.3B in sales, and Installed Base Management delivered €2.8B, nearly €300M above its own guide on extra upgrade demand.
- Management lifted FY26 revenue guidance to €43B-€45B and gross margin to 54%-56%, up from €36B-€40B and 51%-53% in April.
- ASML stock trades at 30.88x NTM normalized earnings, below its 33.82x five-year mean and well below its 50x five-year high.
ASML Stock’s Quiet Engine Is the Fleet Already in the Field
When CFO Roger Dassen walked investors through ASML Holding (ASML) second-quarter results on July 15, the beat did not come from the machines everyone counts. Total net sales reached €9.3 billion, above the top of guidance, and Dassen traced the gap to Installed Base Management, the service and upgrade business, which delivered €2.8 billion, almost €300 million above its own guide.
That detail matters because of where ASML’s limits now sit. The company expects to ship about 65 Low-NA EUV systems this year, plans roughly 30% more capacity for 2027, and is investigating another 30% for 2028, which would take output past 110 tools. After meeting Dassen on September 14, JPMorgan analysts wrote that ASML’s constraint is the speed of EUV assembly, not its supply chain. New tools move at the pace of the cleanroom.
Upgrades do not. A productivity package installed on a scanner already running in a customer fab adds wafer output without taking a slot on ASML’s assembly floor. CEO Christophe Fouquet told analysts that customers want more capacity from existing fabs “as quickly as possible,” that some are asking ASML to accelerate upgrade products, and that new packages are planned for 2027 and 2028. Management now expects Installed Base Management sales to grow more than 30% this year.
The margin line hints at why this business deserves more attention. Dassen attributed the second-quarter gross margin of 54%, against guidance of 51% to 52%, to “very high-margin components” within Installed Base Management. Across the last eight quarters, gross margin has not simply tracked revenue. The December 2025 quarter produced €9.72 billion, the largest sales in the stretch, yet carried a 52.16% gross margin, while the June 2026 quarter reached 53.99% on €9.33 billion. Mix, not just volume, is setting the ceiling.
The Third Quarter Will Show Whether the Mix Is Durable
The evidence supports a narrow but useful conclusion: ASML’s installed base is doing more of the heavy lifting than the tool-count headlines suggest, and it is the part of the business with room to flex while new-tool output stays capped by assembly speed.
The margin record does not yet prove a structural step-up. The June quarter’s 53.99% matched the March 2025 quarter exactly, despite €1.59 billion more in sales, so ASML has returned to its prior high rather than broken through it. The breakout so far sits only in guidance: 55% to 57% for the third quarter on €11 billion to €12 billion in sales, with Installed Base Management at about €2.9 billion. Dassen also credited better-priced EUV tools and fixed-cost coverage from higher volume, so upgrades are one of four margin drivers, not the only one.
Valuation leaves room for that test. ASML stock trades at 30.88x forward normalized earnings, below its 33.82x five-year mean. The multiple fell from near 50x in mid-2026, and the timing, right after the guidance raise, suggests forward estimates climbed faster than the share price. The September 14 AI selloff, when ASML shares fell about 6%, added pressure.
The main unresolved risk sits in Washington. China accounts for about 20% of ASML’s sales this year, and Dutch Prime Minister Rob Jetten told Bloomberg he raised the proposed MATCH Act with President Donald Trump to keep ASML clear of new export curbs. How any final rules treat equipment already installed in China is the detail to watch, because that fleet feeds the same service and upgrade line.
The next check comes with the third-quarter report. A gross margin inside the 55% to 57% range, with Installed Base Management at or above €2.9 billion, would strengthen the case that the installed base is lifting ASML’s earnings power. A print near 54% on higher sales would point back to volume as the main driver.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
