ASML is one of the first semi cap names to report second quarter earnings and it is often seen as a barometer for the momentum the semi cap equipment players.
ASML has two large drivers of revenue growth from logic and memory customers, as logic customers ramp 2nm node capacity and continue to see migration towards the leading edge, while the tight supply in memory is resulting in unprecedented demand for memory capacity.
As a result, we are seeing ASML planning significant capacity expansion in 2027 and 2028, and more importantly, ASML is willing to provide these numbers for the next 2 years which they typically do not do, suggesting high visibility going into the next 2 years.
2Q26 print
2026 outlook
Expanding capacity but more likely to come
Dramatically improved order visibility
Financials
Valuation
Conclusion
ASML’s 2Q26 total net sales were €9.3 billion, which was 6% above consensus.
The beat was primarily driven by higher than-expected installed base management sales of €2.8 billion and 11% above consensus.
EUV system sales were €3.7 billion up 39% from the prior year and 7% above consensus.
China system sales decreased 23% sequentially and 39% from the prior year in 2Q26, which is in line with China import data, representing 14% of 2Q26 product sales.
ASML continues to expect China to normalize to 20% of sales this year, implying China down 8% from the prior year.
This was driven by logic, which would imply further upside from memory, in my view in 2027.
ASML expects memory revenues to grow 75% from the prior year in 2026 and 25% for advanced foundry logic which shows the strong litho intensity increase.
Gross margin for 2Q26 was 54%, compared to consensus expectations of 51.9%.
This beat was primarily due to the contribution of the very high margin components within its installed base management business which drove the revenue upside.
Operating margin for 2Q26 was 37.1%, compared to consensus expectations of 34.6%.
Memory demand is driving majority of the upside revision to 2026 revenue guidance numbers as management expects memory revenue growth to be up 70% from the prior year, but both logic and installed base management are also strong, expected to grow 25% and 30% respectively in 2026.
On the gross margin front, due to improving mix with high levels of upgrades within installed base management helps to drive the upside in 2026 gross margin guidance.
ASML guided 3Q26 net sales to be between €11 billion to €12 billion, ahead of consensus expectations of €10.4 billion, while gross margin was guided to be between 55% to 57%, ahead of consensus expectations of 52.1%.
ASML raised 2026 revenue guidance from the earlier range of €36 billion to €40 billion to the new range of €43 billion to €45 billion.
Based on the new numbers, ASML raised revenue guidance for 2026 by 16% at the midpoint, while also narrowing the range.
At the midpoint, the new guidance implies 35% year-over-year revenue growth, compared to consensus expectations of just 21%.
ASML also raised the gross margin guidance from the earlier range of 51% to 53% to the new range of 54% to 56%, which is a 3-percentage point increase at the midpoint.
Based on the newly revised 2026 revenue and gross margin guidance, I expect EPS upside to be 25% and likely 20% to 30% in 2027 and 2028.
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