Strong demand for AI systems boosted the performance of Dutch semiconductor equipment maker ASML, prompting the company to raise its full-year outlook after reporting better-than-expected quarterly results on Wednesday.
ASML is a critical cog in the global economy and a key bellwether for the tech sector, as everything from smartphones to missiles relies on the semiconductors crafted with its tools.
The Veldhoven, Netherlands-based company said it expects 2026 total net sales to be between €43 billion and €45 billion, with a gross margin between 54% and 56%. It previously predicted annual net sales of between €36bn and €40bn, and a gross margin between 51% and 53%.
“Ongoing AI-related investments and continued progress in AI technologies are driving demand for advanced Logic and Memory chips, further strengthening the semiconductor industry’s growth outlook,” said ASML President and Chief Executive Officer Christophe Fouquet in a statement.
For the three months between April and June, ASML had total net sales of €9.3bn, better than expected. This compares with €7.7bn in the same three months of last year. The gross margin was 54%. Net profits were also better than expected for the second quarter, coming in at €2.9bn, compared with €2.3bn in the same period last year.
Investors were watching the results especially closely after several sharp sell-offs in the tech sector over fears the AI bubble might be approaching a bursting point.
Ben Barringer, head of technology research at Quilter Cheviot, said, “ASML’s results reinforce just how strong demand remains across the semiconductor sector. The company delivered a solid beat and raise, with particularly strong demand coming from both memory and logic chips, although memory is currently growing faster”.
According to ASML, sustained AI investment is driving demand for advanced chips. “Our order intake remained extremely strong in the first half of the year,” said Fouquet, adding that customers of the company “continue to accelerate their capacity expansion plans”, providing ASML with “increased visibility into longer-term demand.”
ASML is the only company in the world that makes extreme ultraviolet (EUV) lithography machines used to produce the most advanced semiconductors.
Strong demand has prompted ASML to plan a roughly 30% increase in production capacity next year for both its most advanced extreme ultraviolet (EUV) chipmaking machines and its older deep ultraviolet (DUV) systems. The company is also considering a further 30% expansion in 2028 while continuing to broaden its machine upgrade business.
ASML said it expects net sales of between €11bn and €12bn for the third quarter of 2026.
‘Technological terrorism’
The company has been caught in the crossfire of a tech spat between the United States and China and has previously warned that its Chinese sales would “decline significantly” this year.
Chief financial officer Roger Dassen said ASML expected China to represent around 20% of its sales in 2026.
“You could say that the Chinese market is moving in sync with the overall behaviour that we see globally,” said Dassen.
Washington is leading efforts to curb high-tech exports to China over fears they could be used to bolster the country’s military.
Beijing has reacted furiously to the measures, describing them as “technological terrorism”.
Last month, ASML denied reports of US concerns that one of its advanced chipmaking machines was in China, potentially violating the restrictions.
In January, ASML announced a shake-up of its organisation that was expected to result in the loss of around 1,700 jobs in the Netherlands and the United States, mainly from leadership roles.
The firm employs roughly 44,000 staff worldwide.