ASML Holding N.V.

ASML · NASDAQ · USD

Can ASML raise output fast enough to turn multi-year, AI-driven capacity commitments from a handful of chipmakers into shipped tools before the equipment cycle turns?

Last 4 earnings calls · through Q3 FY2026

Bull case

  • AI capacity buildout

    The bull case is that AI spending has moved from announcements to actual fab construction, so chipmakers are ordering lithography tools years ahead of delivery.

  • Order book extends years

    Customers are committing to orders well beyond the next year, giving ASML unusual visibility for an equipment maker and letting it plan output increases in advance.

  • Rising lithography intensity

    Advanced logic and DRAM need more EUV and immersion layers per wafer, so ASML's sales rise faster than the number of wafers the industry produces.

  • Pricing and upgrades

    The company is charging more for the value its tools create and selling productivity upgrades to machines already installed, both of which lift margins.

Bear case

  • Chipmaker capital spending cycle

    The bear case is that ASML still sells capital equipment, and orders collapse when chipmakers stop building, as they did in the last two downturns.

  • High-NA adoption timing

    The next-generation High-NA tool is still being qualified, and the largest foundry does not plan to use it in volume production until 2030.

  • Ramp and fab readiness

    Output must rise every quarter and customers must finish their fabs on schedule, and a slip in either turns strong demand into deferred revenue.

  • China and export controls

    A large share of sales goes to China, where export rules and a push for domestic substitutes can shrink the addressable market for ASML's tools.

Bull and bear points

Growth & Execution

In short: Order visibility runs several years out, while delivery depends on ASML's ramp and customers' fab schedules.

Bull · 2

  • Full-year guidance raised twice during 2026

    Management began the year guiding to EUR 34-39 billion in sales and now expects EUR 44-45 billion, after customers raised capital spending during the year.

    Tone shiftQ4 FY2025 → Q3 FY2026

  • Customers ordering Low-NA EUV into 2029 and 2030

    Customers are placing orders for 2028 and asking ASML to book 2029 and 2030, which management links to their own long-term supply contracts.

    Q3 FY2026 call
Bear · 2

  • High-NA volume production is years away

    TSMC does not plan high-volume High-NA production until 2030 and Samsung until 2028, so the next tool generation adds little revenue for several years.

    Q3 FY2026 call

  • Growth depends on customers finishing their fabs

    ASML can only ship when customers have cleanroom space ready, and management says it monitors their construction closely because delays there would cap shipments.

    Q3 FY2026 call

Profitability & Financial Strength

In short: Margins and cash generation are at records, while ramp costs and cyclical upgrade sales put them at risk.

Bull · 2

  • Gross margin up 5.8 points from a year earlier

    Gross margin reached 57.4% in the third quarter of 2026, helped by strong upgrade sales and a richer EUV mix.

    Filed financials

  • Free cash flow more than doubled

    Free cash flow over the last twelve months was $21.1 billion, 53.6% of revenue and well above the prior year's $9.0 billion, helped by customer down payments.

    Filed financials
Bear · 2

  • Ramp costs pull fourth-quarter gross margin lower

    Management guides fourth-quarter gross margin slightly below the record just reported because raising output carries extra cost, and it expects similar costs in 2027.

    Q3 FY2026 call

  • Upgrade sales are the swing factor for margin

    Productivity upgrades sold well above guidance at very high margin, and management names the durability of that upgrade demand as the main swing factor for gross margin.

    Q2 FY2026 call

Market Position

In short: ASML is the sole EUV supplier and is raising prices, while a few chipmakers and China policy drive demand.

Bull · 2

  • First price increases on its most critical tools

    In July management saw no need to revisit tool prices; it has since completed negotiations and raised prices on its most critical systems, effective from 2027-2028.

    Tone shiftQ2 FY2026 → Q3 FY2026

  • EUV replaces multi-patterning process steps

    Each switch from multi-patterning to single-exposure EUV moves spending from other equipment onto ASML's tools, and DRAM makers are now making that switch.

    Q2 FY2026 call
Bear · 2

  • Revenue fell 58% in the last equipment downturn

    In the 2007-2009 downturn revenue dropped 57.6% and operating margin fell from 21.6% to negative 10.2%, showing how quickly chipmaker capital spending reverses.

    Filed financials

  • Export controls threaten China sales

    China is a large part of system sales, and ASML's guidance assumes it can absorb the outcome of ongoing export-control talks while keeping access to Chinese fabs.

    Q1 FY2026 call