ASML Holding N.V. (ASML) | The Buildout — AI Infrastructure
The Verdict
ASML makes the lithography equipment that patterns circuit features onto wafers, along with metrology, inspection, software, and installed-base services. Its EUV and immersion DUV tools are central to the most advanced logic and DRAM nodes, so the AI infrastructure buildout flows through ASML's shipments and upgrades.
| Market Cap | — |
| Revenue (TTM) | $41.0B |
| Revenue Growth | +16.0% |
| EBITDA Margin (TTM) | 38.4% |
| Net Cash | $6.4B |
| Earnings Beats | 5 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- FY2026 revenue guidance was raised to €43–45 billion, up from €36–40 billion after Q1 and €34–39 billion in the 20-F.
- FY2026 gross margin guidance was raised to 54–56% from 51–53%, with Q2 actual at 54% and Q3 guided to 55–57%.
- 2027 Low-NA EUV capacity is close to fully covered with orders, and 2028 has already received a significant number of Low-NA EUV orders.
- Memory-related net system sales are guided to grow over 75% in 2026; advanced logic foundry growth over 25%; EUV growth over 45%.
- Intel Foundry is using ASML High-NA EUV on Intel 18A to produce a subset of Intel Core Ultra Series 3 processors.
What We’re Watching
- Zeiss is the sole supplier of critical optics; ASML's system output is limited by Zeiss production capacity.
- Management says 2027 and 2028 demand estimates are not yet stable, even as visibility extends several years.
- High-NA adoption beyond Intel is not yet proven, and TSMC's High-NA cost concerns were raised but management reframed rather than rebutted.
- Q3 2026 results will test the second-half ramp: guided sales of €11–12 billion and gross margin of 55–57%.
The thesis is strengthening. ASML raised full-year revenue and gross margin guidance sharply, quantified memory and logic growth for the first time, and moved High-NA into named production at Intel. The open question is whether Zeiss optics capacity and still-unstable 2027–2028 demand can support the planned capacity increases.
Earnings Beat
Q2 2026 total net sales were €9.3 billion, above the high end of guidance, with net system sales of €6.6 billion and Installed Base Management sales of €2.8 billion — about €300 million above guidance. Gross margin was 54%, above guidance, and net income was €2.9 billion, or 31.3% of total net sales.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $10.7B | $10.1B | $9.1B | +17.5% |
| Gross margin | 54.0% | 53.0% | 53.7% | +30bps |
| EBITDA | $4.2B | $3.9B | $3.4B | +23.1% |
| EPS | $8.66 | $8.26 | $6.95 | +24.6% |
| Installed Base Management sales | €2.8B | €2.5B | n/a | — |
The current environment provides more flexibility for pricing than what you would have had in different days.— Roger Dassen, CFO, July 15, 2026
Management tone: Management's tone shifted from a Q1 prepared video with no Q&A to a more specific Q2 analyst call. It raised full-year revenue and margin guidance, quantified memory and logic growth for the first time, and laid out capacity plans through 2028. Management was candid that 2027 and 2028 demand estimates are not yet stable, while still describing the environment as providing more pricing flexibility.
Management Guidance
For Q3 2026, management guided total net sales of €11–12 billion, Installed Base Management sales of about €2.9 billion, gross margin of 55–57%, R&D of about €1.2 billion, and SG&A of about €0.4 billion. For FY2026, management raised total net sales to €43–45 billion and gross margin to 54–56%, with about 65 Low-NA EUV and about 130 immersion DUV shipments, EUV net system sales growth over 45%, IBM growth over 30%, memory-related system sales growth over 75%, advanced logic foundry growth over 25%, and China around 20% of total net sales.
Trajectory
Revenue moved from €8.8 billion in Q1 2026 to €9.3 billion in Q2, with gross margin improving from 53% to 54%. Q3 is guided to €11–12 billion at 55–57% gross margin, and the full-year raise to €43–45 billion points to a second-half ramp. The drivers are specific: memory-related net system sales are expected to grow over 75%, non-EUV around 25%, and higher-margin Installed Base Management upgrades are adding both revenue and margin.
The Model
The model projects FY+1 revenue of $51,000 million with EBITDA of $21,165 million (41.5% margin), and FY+2 revenue of $66,700 million with EBITDA of $30,348 million (45.5% margin). Near-term is anchored by the raised FY2026 guide and the close-to-full 2027 Low-NA EUV order coverage; FY+2 steps up on further capacity expansion and a mix shift to E- and F-model EUV tools.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $37.7B | $51.8B | $66.5B |
| YoY Growth | — | +37.4% | +28.5% |
| EBITDA | $14.2B | $21.7B | $29.3B |
| EBITDA Margin | 37.7% | 42.0% | 44.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 14.8% above analyst consensus.
For Q3 2026, management guided total net sales of €11–12 billion, Installed Base Management sales of about €2.9 billion, gross margin of 55–57%, R&D of about €1.2 billion, and SG&A of about €0.4 billion. For FY2026, management raised total net sales to €43–45 billion and gross margin to 54–56%, with about 65 Low-NA EUV and about 130 immersion DUV shipments, EUV net system sales growth over 45%, IBM growth over 30%, memory-related system sales growth over 75%, advanced logic foundry growth over 25%, and China around 20% of total net sales.
What Could Go Right — and Wrong
- Broad High-NA adoption beyond Intel, especially by a large DRAM maker or TSMC, would expand the addressable market for the EXE platform.
- ASML converts the investigated 2028 "110 scenario" into a formal capacity commitment with order support.
- Zeiss optics output expands enough to support the planned +30% Low-NA EUV and +30% immersion capacity increases.
- Memory demand stays tight beyond 2026, sustaining the over 75% memory-related system sales growth.
- Installed Base upgrade strength remains the positive 2027 gross margin swing factor management described.
- Zeiss production capacity or yield disappoints, delaying the 2027 and 2028 Low-NA EUV and immersion capacity plans.
- A large logic or memory customer pauses capex; four customers represented 61.2% of 2025 sales.
- Memory prices or demand corrects, reversing the over 75% memory-related system sales growth expected in 2026.
- High-NA remains isolated to Intel, leaving TSMC's cost concerns unresolved.
- Export-control tightening removes the roughly 20% China revenue mix faster than expected.
Looking Ahead
Over the next 12 months, the story runs through the Q3 2026 and FY2026 results, the ramp of about 65 Low-NA EUV and about 130 immersion systems, the 2027 capacity increases, and a new campus ground-breaking in 2026. The largest signposts are whether Q3 delivery meets the €11–12 billion guide and whether Ichor's expected Q4 EUV module pickup signals the 2027 build.
- Q3 2026Q3 2026 results — Tests guided €11–12B sales, 55–57% gross margin, about €2.9B IBM.
- Q4 2026Ichor EUV module pickup — Supplier expects EUV/litho pickup in Q4; early read on 2027 EUV build.
- FY2026FY2026 shipments and revenue — Tests about 65 Low-NA EUV, about 130 immersion, €43–45B sales.
- 2026New campus ground-breaking — Management expects ground-breaking in 2026; benefit beyond 2028.
- 2027Low-NA EUV capacity +30% — Planned capacity up about 30%, close to fully covered with orders.
- June 10, 2027Capital Markets Day — Updates longer-term views after the current upcycle.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $30.3B | $37.7B | $41.0B | +24.3% |
| Gross Margin | 51.2% | 52.9% | 52.7% | +162bps |
| EBITDA | $10.6B | $14.2B | $72.3B | +33.5% |
| EBITDA Margin | 35.1% | 37.7% | 38.4% | +259bps |
| Net Income | $8.1B | $11.1B | $12.3B | +36.5% |
| Free Cash Flow | $9.9B | $12.6B | $53.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)52.7%
- EBITDA Margin (TTM)38.4%
- Net Margin (TTM)30.1%
- ROIC61.9%
- FCF Conversion72.0%
- SBC / Revenue0.3%
The Company
ASML makes lithography systems, along with software, metrology, inspection, and installed-base services. Its EUV and DUV tools pattern the most advanced logic and memory chips, so AI accelerators, HBM, and AI-era CPUs depend on its systems. The company describes itself as a holistic lithography solution provider and has one reportable segment.
Manufacturing is spread across cleanrooms in the Netherlands, Germany, the US, South Korea, and Taiwan. ASML is vertically tied to Carl Zeiss SMT, its sole supplier of critical optical components; ASML is also Zeiss's single customer for lithography optical columns. Near-term capacity expansion is being done on the existing footprint by freeing up cabins and reducing cycle time, while a new campus is expected to break ground in 2026 but is beyond 2028.
Business Segments
Competitive Landscape
ASML is described in the source material as the dominant lithography supplier for leading-edge semiconductor manufacturing. The material does not identify an alternative supplier of leading-edge EUV systems; ASML's output is constrained more by its own supply chain than by a direct EUV competitor.
Supply Chain
ASML sits between a concentrated optics supply base and a concentrated set of logic and memory fabs. Carl Zeiss SMT is the load-bearing supplier; Intel and unnamed customers are among the buyers.
More on ASML: Earnings recap