ASML lifts 2026 guidance on AI-driven EUV demand
The dominant chip equipment maker raised its full-year outlook after a strong second quarter, signaling that massive AI spending is tightening supply in advanced lithography.
ASML reported second-quarter revenue of $10.65 billion, a 21.3% year-over-year increase that surpassed the company's own expectations. Earnings per share reached $8.67, marking the Dutch manufacturer's fourth consecutive quarterly beat. In response, management lifted its full-year 2026 revenue guidance to a range of $49.11 billion to $51.40 billion.
The upward revision reflects a sudden acceleration in capital expenditure by AI hardware builders. Chief Executive Christophe Fouquet noted that memory customers are "sold out for 2026 and their supply constraint will last beyond 2026." Concurrently, logic chipmakers are aggressively ramping 2nm production capacity to meet AI processing demands. This dynamic essentially forces semiconductor manufacturers to compete for available lithography slots well in advance.
Free cash flow surged 268% year-over-year to $1.50 billion in the quarter, underlining the operational leverage in the business. The stock, trading at $1,775.64, has gained 122% over the past 12 months and is up 66.56% year to date. It carries a forward price-to-earnings ratio of roughly 56 times, a steep premium to peers like Applied Materials at 38 times and Lam Research at 42 times, which the market justifies given ASML's unrivaled position in EUV technology.
Supply chain bottlenecks
ASML's monopoly in extreme ultraviolet lithography leaves chipmakers heavily reliant on its production timelines. To alleviate bottlenecks, the company plans to increase low NA EUV capacity by 30% in 2027, with another 30% expansion under review for 2028. High NA EUV tools are necessary for the most advanced chip nodes, making this capacity expansion critical for the broader semiconductor ecosystem's growth trajectory.
The company closed out 2025 with full-year revenue of $37.94 billion and earnings per share of $28.70. Crucially, it ended that year carrying a backlog of $45.06 billion, providing substantial visibility into future sales. Management now projects a 2030 revenue opportunity between $51.9 billion and $70.8 billion, anchored by gross margins of 56% to 60%. As high NA EUV systems secure broader design wins across the industry, chipmakers' ability to manufacture advanced nodes will remain strictly tied to ASML's output.
