The numbers are stellar, the guidance has been raised for the second time this year, and the order book stretches years into the future. Yet ASML’s stock dropped 1.6% on Friday to €1,543, leaving it 11.7% below the record high of €1,748 reached in late June. The disconnect between corporate performance and market mood is growing, and it has less to do with the quality of earnings than with the question of how far the Dutch lithography giant can push its monopoly before its biggest customers push back.
ASML reported second-quarter net sales of €9.3 billion, comfortably above the consensus estimate of €8.8 billion, and net profit of €2.9 billion. Gross margin climbed to 54%, while the service business delivered around €2.8 billion, beating expectations by roughly €300 million. For the full year, the company now expects revenue of €43 billion to €45 billion, up sharply from the prior range of €36 billion to €40 billion, and has lifted its gross margin guidance to 54%–56%. Third-quarter guidance points to revenue of €11 billion to €12 billion and a margin of 55%–57%.
The engine of that growth remains artificial intelligence, which is feeding demand for both logic chips and memory. But alongside the headline numbers, ASML has quietly announced a 10% price increase for its DUV lithography systems, a move that primarily targets Chinese chipmakers. The company’s CFO has hinted that there is more pricing headroom across the broader portfolio, and that signal has not gone unnoticed by the customers who will foot the bill.
TSMC, ASML’s largest customer by far, is pushing back against the increases, according to reports. Intel, by contrast, has accepted the cost of the newest High-NA EUV machines, which run more than $400 million apiece, and this week confirmed it has shipped its first high-volume logic chips (the Panther Lake processor on the 18A node) using that technology. The divergence in customer reactions underscores the complexity of ASML’s pricing strategy: a monopoly position gives it leverage, but not unlimited leverage, especially when the semiconductor cycle shows signs of maturing in some segments.
The pricing debate is playing out against a backdrop of rapid capacity expansion. ASML is boosting its manufacturing capacity for Low-NA EUV systems by 30% in 2027, with a further 30% increase for 2028 under evaluation. At the same time, the company has cut assembly and test times for EUV machines by roughly a third and achieved a continuous 1,000-watt EUV power output. On the order front, SK Hynix placed a record $8 billion order for up to 30 EUV tools over two years, while the overall order book for EUV systems extends well into 2028.
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China remains a tricky piece of the puzzle. The country accounted for about 20% of ASML’s total revenue, but system sales to Chinese customers fell to approximately 14% in the second quarter as export restrictions tightened. That shortfall has been offset by stronger demand from TSMC, Samsung, and Intel, but the political risk around China is one factor weighing on the stock.
Broader market dynamics have not helped. On July 17 a broad technology sell-off swept through global markets, with the Philadelphia Semiconductor Index losing 4.3% in a single session and memory stocks such as SanDisk and Western Digital suffering sharp declines. Profit-taking after a 140% twelve-month rally in ASML shares, fresh tensions in the Middle East, and weakness in Japanese and Taiwanese chip stocks all contributed to a rotation out of risk assets.
Analysts, however, remain largely undeterred. Bernstein has set a €2,500 price target with an Outperform rating, while Citi raised its target to €2,200 and Berenberg to €2,100. Bank of America targets €2,452 and Kepler Cheuvreux €2,300. Even the most cautious of the majors, Jefferies, stuck with a Hold and a €1,560 target. One Seeking Alpha contributor lifted his target to $2,510 but flagged risks from customer capex delays, export controls, and slower High-NA adoption.
For now, the market is caught between long-term conviction and near-term caution. ASML’s monopoly in lithography remains intact, and the AI-led capex cycle shows no sign of peaking soon. But the pricing power that made the stock a standout is now being tested by the very customers the company depends on. How hard TSMC and other foundries push back in the next round of negotiations will determine whether ASML can keep extracting more value from its position — or whether the limits of that power are finally coming into view.
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