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ASML Raises 2026 Guidance as AI Demand Accelerates Capacity Expansion
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Key Takeaways
ASML's Q3 earnings beat estimates by 19.4%, prompting a higher 2026 sales outlook of euro 44B-45B.
AI-driven demand is stretching ASML's capacity, with orders for 2028 and customer interest through 2030.
ASML's gross margin rose to 57.5% as upgrade sales surged 67.6%, strengthening its profitability outlook.
ASML Holding N.V. (ASML - Free Report) delivered a better-than-expected third quarter as AI-related semiconductor investment translated into higher equipment demand, stronger productivity-upgrade activity and deeper order visibility. Management also raised its 2026 sales outlook as customers accelerated capacity plans.
The demand backdrop is favorable, but ASML now faces a different challenge: expanding manufacturing output fast enough to meet customer requirements while sustaining margins and execution quality.
ASML's Q3 Beat Raises the 2026 Bar
ASML reported third-quarter 2026 earnings of $14.89 per share, beating the Zacks Consensus Estimate of $12.47 by 19.4%. Revenues of $13.42 billion surpassed the consensus mark of $13.18 billion by 1.9%.
The quarter benefited from higher lithography-system sales and strong demand for productivity upgrades. Management now expects full-year 2026 sales of €44 billion-€45 billion, representing growth of about 36% from 2025, with gross margin around 56%.
Fourth-quarter sales are projected between €14.2 billion and €15.2 billion, with Installed Base Management sales expected at around €3.7 billion.
AI Demand Is Stretching ASML's Capacity
ASML's customers expect semiconductor supply to remain below demand through at least 2028, driven in large part by AI-related investment. That outlook is pushing customers to expand advanced Logic and Memory capacity faster and extend their equipment planning further into the future.
Management said discussions are moving beyond 2027, with substantial order intake for 2028 and customer interest extending into 2029 and 2030.
ASML had planned roughly 30% additional low-NA EUV and DUV immersion capacity for 2027 and had been evaluating another 30% increase for 2028. Management now expects those expansion plans to be insufficient to satisfy customer demand and is examining further capacity additions for 2028 and beyond.
ASML's Upgrade Business Lifts Margins
Installed Base Management revenues reached €3.29 billion in the third quarter, up 67.6% year over year and above management's prior expectation. Customers have been using productivity upgrades to add wafer capacity within their existing manufacturing footprints.
That demand also supported profitability. Gross margin reached 57.5%, up from 51.6% a year earlier and 54% in the second quarter.
Management expects full-year 2026 gross margin of around 56%. Higher volume, favorable system mix and growing upgrade revenues are contributing to the improvement.
High-NA and EUV Deepen ASML's Opportunity
ASML expects EUV revenues to increase more than 45% in 2026, while non-EUV revenues are projected to grow about 20%. Installed Base Management revenues are expected to rise around 50%.
High-NA EUV adds another longer-term growth path as customers move toward increasingly advanced semiconductor processes. Adoption, however, remains tied to individual customer roadmaps and qualification schedules rather than a single industrywide transition.
That staggered deployment means High-NA can deepen ASML's technology position over time, but the pace of revenue contribution will depend on customer insertion timing, ecosystem development and successful high-volume manufacturing adoption.
Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) plans to introduce High-NA EUV in high-volume manufacturing around 2030 and is working with ASML on larger-format photomasks. Intel Corporation (INTC - Free Report) , meanwhile, says High-NA EUV is already being used in high-volume manufacturing on select layers, showing that customer adoption is progressing on different schedules.
ASML's Ratings Temper the Momentum
ASML currently carries a Zacks Rank #3 (Hold). The stock has a Growth Score of A, Momentum Score of A, Value Score of D and VGM Score of B.
The Growth and Momentum Scores reflect favorable operating and price characteristics, while the Value Score of D highlights a less attractive valuation profile. The VGM Score combines the stock's value, growth and momentum characteristics into a single measure.
Zacks Style Scores are designed to complement the Zacks Rank, with the most favorable combinations generally involving Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks carrying Style Scores of A or B. A Zacks Rank #3 can still support a Hold stance.
ASML's accelerating demand, higher 2026 outlook and expanding margins strengthen its operating case. Still, the need to scale capacity rapidly while managing customer spending, policy exposure and technology-transition risk supports a measured stance despite the company's strong current momentum.
View the Zacks #1 Rank List
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ASML Raises 2026 Guidance as AI Demand Accelerates Capacity Expansion
Key Takeaways
ASML Holding N.V. (ASML - Free Report) delivered a better-than-expected third quarter as AI-related semiconductor investment translated into higher equipment demand, stronger productivity-upgrade activity and deeper order visibility. Management also raised its 2026 sales outlook as customers accelerated capacity plans.
The demand backdrop is favorable, but ASML now faces a different challenge: expanding manufacturing output fast enough to meet customer requirements while sustaining margins and execution quality.
ASML's Q3 Beat Raises the 2026 Bar
ASML reported third-quarter 2026 earnings of $14.89 per share, beating the Zacks Consensus Estimate of $12.47 by 19.4%. Revenues of $13.42 billion surpassed the consensus mark of $13.18 billion by 1.9%.
The quarter benefited from higher lithography-system sales and strong demand for productivity upgrades. Management now expects full-year 2026 sales of €44 billion-€45 billion, representing growth of about 36% from 2025, with gross margin around 56%.
Fourth-quarter sales are projected between €14.2 billion and €15.2 billion, with Installed Base Management sales expected at around €3.7 billion.
AI Demand Is Stretching ASML's Capacity
ASML's customers expect semiconductor supply to remain below demand through at least 2028, driven in large part by AI-related investment. That outlook is pushing customers to expand advanced Logic and Memory capacity faster and extend their equipment planning further into the future.
Management said discussions are moving beyond 2027, with substantial order intake for 2028 and customer interest extending into 2029 and 2030.
ASML had planned roughly 30% additional low-NA EUV and DUV immersion capacity for 2027 and had been evaluating another 30% increase for 2028. Management now expects those expansion plans to be insufficient to satisfy customer demand and is examining further capacity additions for 2028 and beyond.
ASML's Upgrade Business Lifts Margins
Installed Base Management revenues reached €3.29 billion in the third quarter, up 67.6% year over year and above management's prior expectation. Customers have been using productivity upgrades to add wafer capacity within their existing manufacturing footprints.
That demand also supported profitability. Gross margin reached 57.5%, up from 51.6% a year earlier and 54% in the second quarter.
Management expects full-year 2026 gross margin of around 56%. Higher volume, favorable system mix and growing upgrade revenues are contributing to the improvement.
High-NA and EUV Deepen ASML's Opportunity
ASML expects EUV revenues to increase more than 45% in 2026, while non-EUV revenues are projected to grow about 20%. Installed Base Management revenues are expected to rise around 50%.
High-NA EUV adds another longer-term growth path as customers move toward increasingly advanced semiconductor processes. Adoption, however, remains tied to individual customer roadmaps and qualification schedules rather than a single industrywide transition.
That staggered deployment means High-NA can deepen ASML's technology position over time, but the pace of revenue contribution will depend on customer insertion timing, ecosystem development and successful high-volume manufacturing adoption.
Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) plans to introduce High-NA EUV in high-volume manufacturing around 2030 and is working with ASML on larger-format photomasks. Intel Corporation (INTC - Free Report) , meanwhile, says High-NA EUV is already being used in high-volume manufacturing on select layers, showing that customer adoption is progressing on different schedules.
ASML's Ratings Temper the Momentum
ASML currently carries a Zacks Rank #3 (Hold). The stock has a Growth Score of A, Momentum Score of A, Value Score of D and VGM Score of B.
The Growth and Momentum Scores reflect favorable operating and price characteristics, while the Value Score of D highlights a less attractive valuation profile. The VGM Score combines the stock's value, growth and momentum characteristics into a single measure.
Zacks Style Scores are designed to complement the Zacks Rank, with the most favorable combinations generally involving Zacks Rank #1 (Strong Buy) and #2 (Buy) stocks carrying Style Scores of A or B. A Zacks Rank #3 can still support a Hold stance.
ASML's accelerating demand, higher 2026 outlook and expanding margins strengthen its operating case. Still, the need to scale capacity rapidly while managing customer spending, policy exposure and technology-transition risk supports a measured stance despite the company's strong current momentum.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.