ASML, Europe’s most valuable company and the world’s sole manufacturer of extreme ultraviolet lithography machines, increased its financial projections for the second time in the year following better-than-anticipated quarterly performance. The Dutch semiconductor-equipment maker lifted its full-year sales forecast to between 43 billion euros and 45 billion euros from a previous range of 36 billion to 40 billion euros, while also raising its gross margin expectations to between 54% and 56% from 51% to 53%.
The company attributed the stronger outlook to continued robust demand from customers ramping up artificial intelligence chip production. CEO Christophe Fouquet noted that order intake remained extremely strong in the first half of the year, with customers accelerating their capacity expansion plans. ASML announced plans to increase its 2026 low NA EUV capacity by 30% and its 2026 Deep Ultraviolet immersion capacity by 30% to meet this demand.
Market reaction proved mixed, with the stock initially jumping over 7% at the opening before retreating to close the session down 0.49%. Year-to-date, shares had surged 115%. Analysts attributed the pullback to concerns about elevated valuations and questions regarding the sustainability of artificial intelligence-driven capital spending in the semiconductor sector. One analyst noted the company was trading at roughly a 50x forward price-to-earnings ratio, compared to what they considered a more appropriate 35-40x valuation.
Geopolitical headwinds also weighed on sentiment. ASML faces tightening export controls on its advanced chip equipment, with U.S. lawmakers having proposed legislation that would restrict sales of DUV machines to Chinese chip companies. China’s contribution to ASML’s sales declined to 14% in the second quarter from 19% in the first quarter, though the company maintained expectations for China to represent approximately 20% of annual net sales. South Korea remained the largest market, accounting for 43% of second-quarter sales.
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