ASML Stock Rises as AI Chip Demand Fuels Record Quarter

TLDR

• ASML posted Q1 2026 net sales of €8.8B, gross margins of 53%, and net income of €2.8B
• Full-year guidance raised to €36B–€40B in net sales, implying ~16% year-over-year growth
• CEO says ASML will not become a supply bottleneck, citing capacity investments
• China exposure sits at ~20% of forecast sales; CFO says further U.S. export restrictions remain uncertain
• ASML announced a 17% dividend increase and a new €12B buyback program through 2028

ASML reported a strong first quarter for 2026, beating earnings estimates and raising its full-year outlook on the back of surging AI chip demand. The Dutch semiconductor equipment maker posted €8.8 billion in net sales, a gross margin of 53%, and net income of €2.8 billion — a net profit margin of 31.8%.

ASML Holding N.V., ASML

The company raised its full-year revenue guidance to between €36 billion and €40 billion, with gross margins expected between 51% and 53%. At the midpoint, that implies year-over-year sales growth of around 16%.

CEO Christophe Fouquet addressed investors at the annual general meeting in Veldhoven on Wednesday. He was direct: ASML will not become a bottleneck for the chip industry as it was in the early part of this decade.

Fouquet said the biggest risk to ASML’s position would be failing to deliver equipment on time, which could push customers to look elsewhere. He mentioned startups Substrate, xLight, and Lace by name but was clear they are “ideas, not competition today.”

On the demand side, memory chip customers told ASML they are sold out for 2026, with supply constraints expected to run into 2027. Logic chip customers are building out capacity across multiple nodes while continuing to ramp 2nm production for AI applications.

AI Infrastructure Drives Equipment Orders

ASML holds a virtual monopoly on extreme ultraviolet (EUV) lithography machines — the equipment used to print the most advanced chip circuitry. Customers include TSMC, Samsung, and Intel, who use these machines to manufacture chips for Nvidia, Broadcom, AMD, and Micron.

In Q1, ASML sold just 2 High-NA EUV systems, its most advanced product. For the full year, the company is forecasting production of 60 Low-NA EUV systems, which are driving the bulk of current revenue. EUV systems made up 46.6% of Q1 net sales, with non-EUV systems at 23.9% and servicing at 28.4%.

The company outlined a product roadmap extending to 2033, covering both current High-NA EUV systems and more advanced machines in development. Service revenue from its installed base alone was more than double R&D costs in the latest quarter.

China Sales and Export Risk

CFO Roger Dassen addressed questions about potential new U.S. restrictions on ASML’s China exports. China is forecast to account for around 20% of ASML’s sales this year.

Dassen said it is too early to predict the outcome of proposed legislation. He noted that if capacity is lost in one region, demand doesn’t disappear — other manufacturers will need to fill the gap.

On capital returns, ASML announced a 17% dividend increase alongside a new €12 billion share buyback program running from 2026 through 2028. The company already executed €1.1 billion in buybacks in Q1 alone, following €7.6 billion in repurchases between 2022 and 2025.

At around $1,410 per share at the time of reporting, the stock carries a forward P/E of 39.3, above its 10-year median of 36. ASML would need to gain roughly 42% to cross the $2,000 per share mark.

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