ASML’s latest earnings report did more than just beat expectations – it laid bare a production system running flat out, with the Dutch lithography giant now struggling to keep pace with an AI-driven surge in chip demand. The company lifted its full-year revenue guidance for the second time in 2026, but the real story is how it plans to resolve a capacity constraint that has turned into its own growth bottleneck.
Earnings Swing
For the second quarter of 2026, ASML posted revenue of €9.33 billion, comfortably above the analyst consensus of €8.83 billion and up from €7.69 billion in the same period last year. Net profit climbed to €2.92 billion from €2.29 billion, while earnings per share hit €7.59, also ahead of expectations. Gross margin landed at 54 percent, at the upper end of the company’s own target range.
Chief executive Christophe Fouquet attributed the strong performance to higher service revenue from the installed base and accelerating investments in AI infrastructure, which he said are strengthening the entire semiconductor industry’s growth outlook.
A Second Guidance Lift
Buoyed by an “extremely strong” order intake in the first half – led by memory makers expanding High Bandwidth Memory capacity by 75 percent year-on-year – ASML raised its full-year 2026 revenue forecast to a range of €43 billion to €45 billion, up from its previous €36 billion to €40 billion. Profitability is also set to improve: the gross margin target was lifted to 54–56 percent, versus the earlier 51–53 percent.
For the third quarter, management expects revenue between €11 billion and €12 billion, with gross margin widening to 55–57 percent.
Capacity Offensive
The company said demand currently exceeds its own manufacturing capacity for lithography systems. ASML plans to increase its production capacity for Low-NA EUV and immersion DUV tools by 30 percent in 2027 compared with 2026. That would translate to roughly 85 Low-NA EUV units delivered in 2027, up from an expected 65 this year. A further 30 percent expansion is being evaluated for 2028, which would bring annual output to around 110 systems.
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Geographic Realignment
A notable shift is underway in ASML’s customer base. China’s share of system sales fell to 14 percent in the second quarter from 19 percent in the first, while South Korea and Taiwan absorbed the slack, accounting for 43 percent and 30 percent of deliveries, respectively. The change reflects massive foundry and memory investment programs in those two markets.
Pricing Clout and Customer Pushback
The tight lithography market is giving ASML rare pricing leverage. Management signaled room to raise prices on advanced systems, and negotiations with large customers such as TSMC over service packages and discounts are ongoing. The secondary article notes that TSMC has publicly opposed the price increases, but ASML is proceeding with its plan nonetheless.
Intel Commits to High-NA EUV
On the technology front, Intel has officially qualified ASML’s High-NA EUV systems – the TwinScan EXE line – at its Oregon facility. The machines, which cost around $400 million each and deliver 8-nanometer resolution (compared with 13 nm for the previous generation), are now being used for selected layers of Intel’s 18A process. That process powers both the “Panther Lake” processors and the Core Ultra 3 series. The higher resolution comes with a cost: exposure costs are 2.5 times those of the older standard.
Stock Hovering Below Record
ASML shares closed Thursday at €1,560.00, down 1.18 percent on the day, after having touched a record high of €1,748.00 on June 30. The mild reversal reflects the sheer force of the preceding rally: the stock is still up 57.85 percent year-to-date and trades 32.15 percent above its 200-day moving average of €1,180.45. The relative strength index of 50.1 points to a neutral reading after the post-earnings volatility.
Market capitalisation stands at €604.72 billion. ASML bought back €1.1 billion of its own shares in the second quarter and has declared an interim dividend of €1.88 per share, payable on 5 August 2026.
With factory slots filling well ahead of schedule and pricing power intact, investors will be watching closely whether ASML can execute on its ambitious capacity expansion without alienating key customers – and whether the next wave of orders will push the stock back toward its June peak.
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