ASML surges on record bookings as AI chip demand powers 2026 outlook
Dutch lithography giant reports €13.2B in quarterly orders, more than doubling analyst expectations
ASML Holding NV, the Dutch maker of semiconductor lithography systems, surged in Wednesday trading after reporting quarterly bookings that more than doubled analyst expectations, as manufacturers race to build capacity for artificial intelligence chips.
The Veldhoven-based company reported fourth-quarter net bookings of €13.2 billion, shattering analyst estimates of €6.3 billion and marking a 109% beat. The figure represents a more than doubling from the €5.4 billion in bookings recorded in the third quarter, with €7.4 billion attributed to advanced extreme ultraviolet (EUV) systems alone.
The extraordinary order intake reflects a "notably more positive assessment of the medium-term market situation" from customers, according to the company's earnings release, driven primarily by expectations that "the sustainability of AI-related demand" will underpin continued semiconductor industry expansion.
ASML's stock, which trades on Nasdaq, rose 2.9% to $1,454.59 on Wednesday, extending its rally this year. The company now commands a market capitalization of approximately $527 billion, reflecting its critical position in the semiconductor supply chain as the sole supplier of EUV lithography machines required for manufacturing the most advanced chips.
For the full year 2025, ASML reported total net sales of €32.7 billion with net income reaching €9.6 billion, yielding a profit margin of 29.4%. The company ended the year with an order backlog of €38.8 billion, providing substantial revenue visibility for the coming years.
Looking ahead, ASML raised its 2026 sales outlook to a range of €34 billion to €39 billion, exceeding the approximately €35 billion consensus among analysts. The guidance implies growth of up to 19% from 2025 levels, with management forecasting that 2026 "will be another growth year, largely driven by a significant increase in EUV sales and growth in installed base business sales."
The upbeat outlook follows recent moves by major memory chipmakers to accelerate capital spending. SK Hynix, the South Korean memory manufacturer, is preparing to increase capital expenditure to $20.5 billion in 2026, a 17% increase year-over-year, primarily to expand capacity for High Bandwidth Memory (HBM4) used in AI applications. Analysts at Barclays expect SK Hynix alone to order 12 ASML EUV machines in 2026, underscoring the surge in demand.
SK Hynix's M15X fabrication facility in Cheongju, which completed construction in November 2025, is scheduled to begin mass production of HBM chips in November 2026, representing a significant new source of demand for ASML's equipment. The memory giant has also announced a $10 billion investment to establish a U.S.-based entity focused on AI solutions, signaling sustained capital outlays.
ASML's management noted that while the record Q4 bookings provide strong momentum, "a considerable portion of the record Q4 2025 bookings is slated for delivery in 2027," indicating that the current order strength will support growth beyond the immediate fiscal year.
The company also announced a new share buyback program of up to €12 billion to be executed by December 31, 2028, and proposed a total dividend for 2025 of €7.50 per ordinary share, representing a 17% increase from the prior year. These capital return initiatives reflect management's confidence in the business's cash generation capabilities despite significant ongoing investment in research and development.
Analysts remain broadly positive on ASML's prospects, with 37 of 37 analysts covering the stock rating it either buy or strong buy, according to recent data. The consensus target price stands at $1,319.52, suggesting potential upside from current levels even after the recent rally.
However, some analysts have raised concerns about valuation, with the stock trading at approximately 48 times trailing earnings and 16.4 times sales. The company's price-to-earnings ratio exceeds the growth rate of its earnings, as reflected in a PEG ratio of 2.49, indicating that much of the positive AI demand narrative may already be priced into shares.
The semiconductor equipment industry is experiencing what many analysts describe as an "AI supercycle," driven by massive investments from hyperscale cloud providers and chipmakers racing to meet surging demand for AI computing power. ASML's monopoly position in EUV lithography makes it a key bottleneck in the expansion of leading-edge semiconductor manufacturing capacity.
For the first quarter of 2026, ASML anticipates net sales between €8.2 billion and €8.9 billion with gross margin projected between 51% and 53%. The company plans to increase its focus on engineering and innovation by streamlining its Technology and IT organizations, positioning itself to maintain its technological leadership in lithography systems.