Key Takeaways
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- Q3 orders hit €5.40B (vs. €2.63B YoY), topping ~€5.36B consensus; EUV orders were €3.60B (vs. €2.22B expected).
- Shares rose >3%; stock up ~30% YTD on AI-driven capex momentum.
- 2025 guidance reaffirmed: ~15% sales growth to ~€32.5B; gross margin ~52%.
- CEO guides that 2026 sales shouldn’t be below 2025; stronger EUV demand expected, DUV to China likely weaker.
- China exposure to decline materially in 2026 amid tariff/export-control risks; EU–US 15% semiconductor tariff cap stabilizes transatlantic trade.
What happened?
ASML reported stronger-than-expected Q3 orders of €5.40B, nearly doubling year over year, with EUV bookings of €3.60B far above forecasts—signaling sustained investment in leading-edge nodes for AI and advanced compute. Q3 sales were €7.52B (in line with guidance, slightly below Street), with net profit at €2.13B and gross margin of 51.6%, above consensus and the high end of company guidance. Management reaffirmed 2025 targets (sales ~€32.5B, GM ~52%) and guided Q4 sales to €9.2–€9.8B with GM of 51–53%. Partnerships across the ecosystem (Nvidia–Intel, Samsung–OpenAI, AMD–OpenAI) support multi-year tool demand. The newly agreed EU–US tariff ceiling reduces uncertainty for Europe–US flows, while U.S.–China tensions and prospective 100% U.S. tariffs raise downside risk to China-bound shipments.
Why it matters
EUV order strength validates a durable AI/advanced-compute capex cycle and suggests foundries and IDMs are locking in 2nm/High-NA and advanced DRAM roadmaps. Higher mix of EUV tools supports structurally stronger margins and cash generation, underpinning capital returns and capacity investments. However, rising policy friction with China (historically a large revenue share) introduces geographic concentration risk and mix pressure toward non-China customers; management expects a significant decline in China sales versus 2024–2025, partially offset by broader customer uptake.
What’s next?
Into January, investors should watch for 2026 guidance clarity, particularly EUV shipment cadence (High-NA ramps), service/installed-base growth, and visibility beyond AI servers into PCs/edge AI adoption. Track any implementation details of U.S. export curbs and tariff actions impacting China DUV shipments and whether EU–US policy stability further de-risks European demand. Near term, order momentum vs. capacity constraints will be key for delivery schedules, while mix shifts (more EUV, less China DUV) will drive gross margin trajectory.
