ASML Surges On AI Orders: 2026 Growth Locked In?
ASML's Q4 2025 results align closely with the details provided. The company reported Q4 net sales of €9.7 billion (record), gross margin of 52.2%, and net income of €2.8 billion. Full-year 2025 net sales reached €32.7 billion (up ~16% YoY implied) with a 52.8% gross margin and €9.6 billion net income. Net bookings in Q4 hit a record €13.2 billion (nearly double consensus expectations around €6.3 billion), including €7.4 billion from EUV systems; the year-end backlog stood at €38.8 billion (with ~€25.5 billion EUV). Revenue in Q4 included two High-NA EUV systems.
2026 growth appears locked in based on guidance and CEO commentary. ASML guided 2026 total net sales to €34–39 billion (roughly 4–19% growth from 2025's €32.7 billion; above prior analyst consensus around €35 billion in some reports), with gross margin 51–53%. Q1 2026 sales are expected at €8.2–8.9 billion (same GM range). CEO Christophe Fouquet stated: customers have a "notably more positive assessment of the medium-term market situation, primarily based on more robust expectations of the sustainability of AI-related demand," leading to a "marked step-up in their medium-term capacity plans" and record order intake. He expects "2026 to be another growth year... largely driven by a significant increase in EUV sales and growth in our installed base business sales," with ongoing investments in people and footprint "to support that growth in 2026 and beyond."
AI-driven demand from hyperscalers (e.g., Microsoft, Meta) and logic/memory customers (TSMC, Intel, Samsung, etc.) is the primary catalyst, accelerating advanced node capacity for AI accelerators and data centers. EUV (especially High-NA for sub-3nm/2nm processes) is central; Q4 orders reflect this ramp. Backlog provides multi-quarter visibility.
Is ASML entering a multi-year AI capex supercycle? Evidence supports a sustained upcycle rather than a short-term spike. Record Q4 bookings (far exceeding expectations), expanding EUV backlog, CEO emphasis on "sustainability" of AI demand and "medium-term" capacity plans, plus investments "and beyond" signal confidence in multi-year growth. Analysts model further revenue expansion into 2027 (e.g., 14% growth to >€43 billion) as 2026 EUV orders flow through. Earlier 2025 caution ("cannot confirm" 2026 growth) has been overtaken by stronger AI spending signals from chipmakers. However, semiconductor capex remains cyclical—potential risks include AI ROI slowdowns, hyperscaler capex moderation, geopolitical export curbs (especially China, historically material portion), High-NA yield/ramp challenges, or broader macro weakness. ASML holds a near-monopoly on EUV/High-NA, strengthening its position.
Stock reaction and valuation context: Shares surged post-earnings (reports cite 5–10%+ moves intraday/AH/pre-market depending on timing; hit record highs near $1,493), driven by the beat and raised outlook. As of late Jan 28 2026 data: price ~$1,432 (intraday, prev close ~$1,455; fluctuated), market cap ~$556B, trailing P/E ~49.7, forward P/E ~45.7, TTM EPS ~$28.80, YTD performance +33.5%, 52-week range $578–$1,493. Analyst average target ~$1,361 (some pre-earnings/outdated; e.g., Bernstein recently $1,642), with mixed views—bullish on AI long-term but notes of stretched valuation after strong rallies (one downgrade to Hold post-results citing 50%+ recent gains). New €12B buyback (through 2028) and dividend increase (to €7.50/share, +17%) provide support.
Chase momentum or wait for pullback? After the sharp post-earnings rally and premium valuation (high-40s forward P/E), a pullback or consolidation would offer better entry for risk-adjusted returns—momentum stocks can retrace on any guidance nuance, macro news, or profit-taking. Long-term AI believers may view dips as buying opportunities given structural demand, backlog visibility, and capital return program. This is not financial advice; consider your risk tolerance, diversification, and full due diligence. Semi equipment remains volatile.
Overall, results reinforce ASML's pivotal role in AI infrastructure with solid near-term visibility and positive multi-year signals, tempered by valuation and cyclical risks.
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