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ASML Reports Strong Q3 Profit and Warns 2027-2028 Chip Equipment Supply Will Fall Short of AI Demand

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ASML$1,718.14 0.02%ASML€1,550.60 2.72%

ASML Holding (NASDAQ:ASML) reported third-quarter net income of 4.96 billion, exceeding the 4.1 billion consensus expectation, supported by a 57.5% gross margin. Net sales reached a record 11.66 billion, coming in slightly below the 11.72 billion projected. The semiconductor equipment manufacturer also repurchased approximately 4.1 billion of its stock during the third quarter.

Driven by ongoing investments in artificial intelligence, customers continue to elevate their short- and medium-term equipment needs, with some seeking order placements for 2029 and 2030. Chief Executive Christophe Fouquet stated that planned supply for 2027 and 2028 will fail to meet full customer demand, leading the company to explore ways to expand its 2028 capacity beyond a previously planned 30% increase.

For the full year 2026, ASML narrowed its sales guidance to between 44 billion and 45 billion, raising the lower bound from 43 billion. For the fourth quarter, the company forecasts sales between 14.2 billion and 15.2 billion with a gross margin near 57%. Sales to customers in China are expected to remain at roughly 20% of overall revenue.

Key points

  • ASML posted Q3 net income of 4.96 billion on record net sales of 11.66 billion, with a gross margin of 57.5%.
  • Demand for lithography equipment is exceeding planned supply capacity for 2027 and 2028 due to AI investments.
  • The company is exploring options to increase 2028 capacity beyond its previously announced 30% target.
  • ASML narrowed its 2026 sales target to 44 billion to 45 billion and bought back 4.1 billion in shares during Q3.

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Questions and answers

What were ASML's third-quarter net income and sales results?

ASML reported third-quarter net income of 4.96 billion, exceeding expectations of 4.1 billion. Record net sales reached 11.66 billion, slightly below the 11.72 billion consensus, while gross margin was 57.5%.

Why is ASML facing a supply shortage for 2027 and 2028?

Surging investment in artificial intelligence has prompted chipmakers to raise equipment forecasts. ASML reported that planned supply for 2027 and 2028 will not fully meet customer demand, leading the company to seek capacity expansion beyond its original 30% growth target for 2028.

What is ASML's sales outlook for 2026 and Q4?

ASML narrowed its 2026 sales outlook to between 44 billion and 45 billion. For the fourth quarter, the company expects sales of 14.2 billion to 15.2 billion with a gross margin around 57%. China is projected to remain at about 20% of sales.