ASML surges on record €13.2B orders as AI chip demand accelerates
Dutch semiconductor equipment maker forecasts up to 19% sales growth for 2026 and announces €12B buyback
ASML, the Dutch semiconductor equipment maker that supplies the critical machinery needed to manufacture advanced chips, reported record quarterly orders that handily exceeded analyst forecasts, signaling accelerating demand from artificial intelligence applications.
The Veldhoven-based company posted net bookings of €13.2 billion in the fourth quarter of 2025, more than double the €6.3 billion that analysts had expected and a dramatic increase from €5.2 billion in the third quarter. Of the total bookings, €7.4 billion were attributed to Extreme Ultraviolet (EUV) systems, the company's most advanced and expensive equipment used to produce cutting-edge chips for AI and data center applications.
"We saw strong demand for our advanced systems, driven by the continued need for manufacturing capacity for logic and memory chips to support AI-related applications," the company stated in its earnings release.
The robust order book propelled ASML shares higher in European trading, reflecting investor confidence in the company's position as a key enabler of the AI infrastructure buildout. The stock performance lifted semiconductor equipment peers, with the broader sector tracking the gains.
For the fourth quarter, ASML reported net sales of €9.7 billion, up 5% from the same period a year earlier, while net income reached €2.8 billion. Gross margin for the quarter stood at 52.2%. Full-year 2025 sales totaled €32.7 billion, a 16% increase from 2024, with net income of €9.6 billion and an annual gross margin of 52.8%.
The company's backlog at year-end swelled to €38.8 billion, providing significant visibility into future revenue streams. Notably, analysts at Morgan Stanley observed that a substantial portion of the record bookings are scheduled for 2027 delivery, indicating sustained demand beyond the immediate term.
ASML provided bullish guidance for 2026, projecting total net sales between €34 billion and €39 billion, which represents growth of up to 19% compared to 2025 levels. The forecast range exceeds prior consensus estimates of approximately €35.1 billion. Gross margin for 2026 is expected to remain strong at 51% to 53%. For the first quarter of 2026, the company anticipates sales between €8.2 billion and €8.9 billion, ahead of analyst expectations of €7.79 billion.
Demonstrating confidence in its business outlook, ASML announced a new share buyback program of up to €12 billion to be executed by December 31, 2028. The company's previous buyback program, launched in 2022 with a €12 billion target, concluded in December 2025 after repurchasing €7.6 billion of shares. Additionally, ASML plans to increase its total dividend for 2025 by 17% to €7.50 per ordinary share.
The capital return initiatives come alongside strategic restructuring efforts. The company plans to reduce its workforce by approximately 1,700 positions, primarily at leadership levels, as it seeks to streamline operations and improve efficiency. ASML also announced a strategic investment of €1.3 billion in Mistral AI to accelerate artificial intelligence-driven innovation within its own operations.
Analysts responded positively to the results and forward-looking statements. Evercore ISI reiterated an "Outperform" rating on the stock, while Morgan Stanley named ASML its top pick among European semiconductor stocks. The average 12-month price target among analysts stands at approximately €1,400, with some firms setting targets as high as €1,518.
The strong performance highlights ASML's critical role in the semiconductor supply chain. The company holds a virtual monopoly on EUV lithography systems, which are essential for manufacturing the most advanced chips used in AI applications, smartphones, and data centers. Major customers include Taiwan Semiconductor Manufacturing Company, Intel, and Samsung.
However, the company acknowledged headwinds in certain markets. Revenue from China, which has historically represented a significant portion of ASML's sales, declined sequentially and is expected to decrease further as a percentage of total sales in 2026. The Dutch government, under pressure from the United States, has implemented export restrictions on certain advanced chip-making equipment to China, limiting ASML's access to one of its largest markets.
Despite these geopolitical constraints, the relentless pace of AI adoption continues to drive investment in semiconductor manufacturing capacity. Tech giants including Microsoft, Google, and Amazon are committing billions to data center infrastructure, while chipmakers race to expand production of advanced processors needed to train and run AI models.
ASML's record orders suggest that this trend is translating into sustained demand for capital equipment. The €38.8 billion backlog provides considerable revenue visibility, while the 2026 guidance indicates the company expects the current momentum to continue through the next year.
Looking ahead, investors will be monitoring execution on the ambitious guidance, the pace of EUV system deliveries, and the impact of geopolitical restrictions on the Chinese market. The company's ability to maintain its technological lead and navigate the complex trade landscape will be key factors in sustaining its growth trajectory.