ASML Surges 7% on Record Orders, Strong 2026 Outlook
Chip equipment giant posts Q4 bookings of €13.2 billion, more than double expectations. Full-year guidance tops analyst estimates.
ASML Holding crushed expectations Wednesday morning, posting record quarterly orders that signal the AI-driven chip buildout is accelerating, not slowing.
The Dutch semiconductor equipment maker reported Q4 bookings of €13.2 billion ($15.8 billion)—more than double the €6.32 billion analysts had projected. Shares jumped 7% in premarket trading on the beat.
The Numbers
Fourth-quarter net sales hit €9.7 billion versus €9.6 billion expected. Net profit of €2.84 billion came in slightly below the €3.01 billion consensus, but nobody cared—the order strength commanded all the attention.
For full-year 2025, ASML reported €32.7 billion in total sales with a 52.8% gross margin. Net income reached €9.6 billion, a company record.
More importantly for forward-looking traders: ASML guided 2026 revenue between €34 billion and €39 billion, with gross margins of 51-53%. The midpoint sits above the €35.1 billion analyst consensus.
Why Orders Exploded
ASML makes the extreme ultraviolet (EUV) lithography machines that manufacturers need to produce the most advanced chips. There's no substitute. TSMC, Samsung, and Intel all depend on ASML's equipment to push below 5-nanometer manufacturing.
The AI infrastructure buildout has created unprecedented demand for cutting-edge chips. NVIDIA's data center GPUs, AMD's Instinct accelerators, and the custom silicon being designed by hyperscalers all require the latest manufacturing nodes—which require ASML's machines.
CFO Roger Dassen called Q4 a "record quarter for orders" and noted that EUV revenue will "significantly increase" in 2026 as chipmakers expand production of advanced semiconductors.
The backlog now stands at €38.8 billion, of which €25.5 billion is EUV-specific. That provides exceptional visibility into revenue for the next several quarters.
The China Factor
One dynamic investors are watching: ASML expects China to account for roughly 20% of 2026 sales, down significantly from 2024 and 2025 levels.
U.S. export controls have restricted ASML's ability to sell its most advanced EUV systems to Chinese customers. The company has complied with these rules, but the revenue loss is material. China represented a much larger share of business before the restrictions.
ASML framed the China decline as already factored into guidance. The strong non-China demand from TSMC, Samsung, and others more than compensates—at least for now.
The Layoff Announcement
In a less bullish development, ASML announced it will cut around 1,700 positions, mostly in the Netherlands with some in the United States.
Management attributed the cuts to organizational efficiency rather than demand concerns. Some parts of the company have become "less agile," and the restructuring aims to address that. Given the record order numbers, this looks like operational tightening rather than distress.
Capital Returns
ASML announced a €12 billion share buyback program to run through December 2028. The 2025 dividend will be €7.50 per share, up 17% from 2024.
These shareholder returns signal confidence that the current demand surge is sustainable. Companies don't commit to multi-year buybacks if they expect revenue to collapse.
The Setup Going Forward
ASML shares have rallied nearly 30% year-to-date, making Wednesday's surge an extension of an already strong run. The stock trades at roughly 35x forward earnings—a premium justified by the monopolistic position in EUV.
The TSMC earnings from last week showed similar strength in AI-related chip demand. Together with ASML's results, the semiconductor supply chain is telling a consistent story: the AI buildout has years to run, and the equipment makers are the clearest beneficiaries.
For traders positioned in the semiconductor space, ASML's order beat validates the thesis that 2026 capex remains robust. The chip sector rally has fundamental support behind it.