ASML Rises On Upgraded Outlook As Capacity Expansion Signals Robust Chip Demand

Technology stocks moved higher early Wednesday after ASML Holding delivered strong earnings and raised its full-year guidance, providing fresh evidence that demand for the advanced chips and manufacturing equipment powering the AI boom remains intact.

Nasdaq 100 futures gained about 40bps, while ASML shares rose 4% in Amsterdam after the company lifted its annual sales forecast for the second time this year. SK Hynix surged 8.8% in Seoul as the memory-chip maker's locally listed shares caught up with its US-listed ADRs, which soared 27% on Tuesday.

Focusing on ASML earnings, the company now expects annual revenue of 43 billion euros to 45 billion euros, well above its previous guidance and the Bloomberg Consensus estimate of 39.3 billion euros.

Second-quarter sales and profit also beat the Bloomberg Consensus estimate, while ASML lifted its full-year gross-margin forecast to as much as 56%, exceeding the 52.5% estimate.

ASML shares are up 4% in Amsterdam. Year-to-date, shares have risen 75%, continuing a powerful uptrend and maintaining the up-and-to-the-right pattern since mid-2025.

ASML plans to increase capacity for its low-NA extreme ultraviolet lithography machines by about 30% in 2027 and is considering another 30% expansion in 2028. CEO Christophe Fouquet said customers are increasing capital-spending plans, creating demand for more machines beginning this year.

Here's a snapshot of the full-year forecast (courtesy of Bloomberg):

• Sees net sales EU43 billion to EU45 billion, saw EU36 billion to EU40 billion, estimate EU39.3 billion (Bloomberg Consensus)
• Sees gross margin 54% to 56%, saw 51% to 53%, estimate 52.5%

Third quarter forecast:

• Sees net sales EU11.0 billion to EU12.0 billion, estimate EU10.27 billion
• Sees gross margin 55% to 57%, estimate 52.5%
• Sees R&D expenses about EU1.2 billion

Results suggest that ASML customers, including TSMC, Samsung and SK Hynix, are expanding production, while Intel has begun using the company's most advanced High-NA system. ASML expects a surge in demand from Elon Musk's proposed Terafab chipmaking project.

Here is Goldman analysts' first take on the ASML earnings, very positive:

ASML: Q2 beat, FY26 guidance was raised, and — more importantly — management gave stronger color on 2027 and 2028

Low-NA EUV capacity, directly addressing the key investor debate. Q2 sales of €9.3bn beat consensus of €8.9bn and came in above the top end of guidance.

Gross margin of 54.0% was also well ahead of the 51–52% guide and 51.7% consensus. Q3 guidance was materially better than expected, with sales of €11–12bn — around 11% above VA consensus at the midpoint — and gross margin of 55–57%, implying Q3 EBIT is roughly 26% above VA consensus.

The most important takeaway is that management addressed the core investor question on AI-driven EUV capacity. ASML said AI demand is accelerating customer capacity plans, order intake was "extremely strong," and it now plans to add 30% to 2026 Low-NA EUV capacity of c.65 tools for 2027, taking capacity to roughly 85 tools.

Other commentary from Wall Street (courtesy of Bloomberg):

Barclays (overweight)

• “We think ASML has given a lot of what investors were looking for," says analyst Simon Coles
• Says its guidance for low-NA EUV capacity for 2027 and 2028 should reduce investor debate on whether the firm is supply constrained
• Low-NA EUV bookings in 1H could be as much as €22b, reaching record levels

JPMorgan (overweight)

• The 2028 capacity guidance implies more than €65 in EPS for 2028, potentially enhanced even more so by the very strong installed base management revenue, says analyst Sandeep Deshpande
• The company isn't guiding to 90 EUV tools for 2027, but "we don't believe this should matter" given the much stronger-than- expected guidance for EUV and DUV capacity for 2028

Jefferies (hold)

• The company's outlook comments are mixed, with the strong increase in installed base management sales and gross margins being especially positive, while the 2027 EUV guide is underwhelming, says analyst Janardan Menon
• Says 2027 low-NA EUV capacity guidance is below market expectations that have climbed sharply recently

Morgan Stanley (overweight)

• Despite no longer reporting bookings, the company talked of very strong order intake continuing across 1H, and customers looking to accelerate capacity expansions, says analyst Lee Simpson
• That suggests strong sales momentum into FY27

Oddo BHF (outperform)

• Estimates should go up materially, probably in the range of 20%
• China exposure remains at around 20% of 2026 sales but is now on a materially higher revenue base, with incremental demand coming primarily from logic
• "ASML remains a story of unrivaled tech dominance and now benefits from a fundamentally different cycle driven by AI"

Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management, noted, "As such, company fundamentals matter more than ever."

But more importantly, read our latest note on hyperscaler stress titled "Carnage" In The Hyperscaler Bond Market: Did Goldman Just Pop The AI Debt Bubble ...