ASML lifted its 2026 revenue target on Wednesday. The Dutch company now expects net sales of €36–40 billion.
Big upgrade as AI demand keeps growing
ASML raised its full-year 2026 sales guidance after beating first-quarter expectations. The firm said it now sees net sales between €36 billion and €40 billion, up from a prior range of €34 billion to €39 billion. That revision came after stronger-than-expected revenue and profit in Q1, driven by sustained orders for equipment used to build AI chips.
The quarter itself was hefty. ASML reported first-quarter sales of about €8.76 billion and net profit around €2.76 billion. Both figures topped the equivalent period a year earlier, and they pushed the company to lift its outlook for the year.
Chipmakers are rushing to increase their capacity. ASML makes the complex lithography systems that let foundries etch ever-smaller circuits onto silicon, and customers are ordering more of those machines to keep up with demand for processors and memory used in AI infrastructure and data centres.
Who’s buying and what they want
Memory demand stood out in the quarter. ASML said 51% of net sales for its new tools went to memory customers, up from about 30% in the prior quarter.
Memory chips are a key component for large AI models and data-centre operations, and higher memory prices have pushed producers to expand output.
South Korean firms were especially prominent. Customers in South Korea accounted for 45% of ASML’s sales in the quarter, while Taiwan buyers represented 23% and China system sales fell to 19% from 36% in the prior quarter. That shift shows how the scramble for memory and advanced logic capacity is reshaping ASML’s geographic mix of business.
One of ASML’s biggest clients, Taiwan Semiconductor Manufacturing Co. (TSMC), reported record quarterly revenue recently as demand for AI-related chips stayed strong. Together, those signals explain why ASML is forecasting a material uptick in 2026 bookings.
Capacity, production and the EUV bottleneck
ASML remains the only company able to supply extreme ultraviolet (EUV) lithography tools — the machines needed for the most advanced chips. Those systems can cost roughly $300 million each and require long lead times to make. ASML’s delivery schedule is crucial for the whole chip industry.
The company told investors it expects to ship about 60 of its flagship low-NA EUV tools in 2026 — roughly 25% more than in 2025 — and plans capacity to ship about 80 such systems in 2027. Those figures suggest ASML is ramping manufacturing, but demand still looks to outstrip supply for now.
Orders for other kinds of lithography equipment are up, too, because foundries are expanding lines for both logic and memory. The result: longer order books and steeper near-term commitments from chipmakers who want to lock in equipment and avoid missing out as AI workloads grow.
Geopolitics and the China problem
There’s a catch. ASML faces export constraints for its most advanced machines, and that’s reshaped part of its business. System sales to China dropped markedly — to 19% of total sales in the quarter — after being about 36% in the December quarter. Export restrictions mean ASML can’t ship its top-end tools to some Chinese customers, so that business has shrunk while demand elsewhere has picked up.
On top of existing restrictions, a group of U.S. Lawmakers recently proposed further limits that could, if passed, extend curbs to less-advanced systems. That bill must go through the U.S. Legislative process before anything changes, but its existence has already added uncertainty for how ASML and customers plan future capacity.
Market reaction and investor view
Investors have responded positively to ASML’s role in the AI supply chain. The stock has climbed sharply this year as data-centre construction and memory shortages pushed chipmakers to place new orders. Analysts tracked by LSEG had placed 2026 consensus estimates near €37.7 billion before the upgrade; ASML’s new range sits above that midpoint.
ASML’s place in the market is unique. Foundries such as TSMC rely on its EUV machines to produce chips that power AI accelerators and high-end consumer processors. ASML acts like a 'picks-and-shovels' company for AI development—it doesn’t make chips but provides the tools others use to make them.
Industry ripple effects
The memory squeeze has pushed up prices and convinced producers to expand. South Korea’s Samsung and SK Hynix are planning capacity increases, and those moves typically mean more orders for ASML gear. Higher memory output could ease pricing pressure later, but only if factory expansions and equipment deliveries keep pace.
Meanwhile, foundries that make processors for AI — often contracted by cloud providers and chip designers — are racing to scale. The combination of memory expansion and logic capacity growth explains why ASML sees stronger short- and medium-term demand for its products, as CEO Christophe Fouquet, ASML CEO, put it in a statement tied to the results.
Risks and what could go sideways
There are several ways growth could slow. Supply-chain interruptions or delayed ramp-ups at ASML would push deliveries out and tighten chip supply. So would any escalation in export controls that cuts off key markets. Rapid, unexpected changes in end-customer demand — for instance, if AI spending cools — would also blunt orders.
That said, the near-term view from ASML’s management is confident. The company pointed to long-term agreements between chipmakers and their customers as support for accelerated capacity plans in 2026 and beyond, suggesting bookings reflect more than short-lived hype.
What to watch next
Right now, there are a handful of numbers and milestones to keep an eye on. Shipments of low-NA EUV tools in 2026 will show whether ASML can meet the pace it’s forecasting. Memory suppliers’ investment plans and the pace of data-centre construction will help determine how long demand stays elevated. And any changes in export policy coming out of Washington would be a direct risk to ASML’s ability to serve certain customers.
For now, customers are accelerating orders and ASML is signalling it will expand shipments. The demand surge linked to AI has pushed the firm into a clear growth phase — and the company’s guidance reflects that shift.
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ASML expects to ship about 60 of its flagship low-NA EUV tools in 2026, roughly 25% more than in 2025.
This article was created with AI assistance.
