ASML soars in Amsterdam: results beat expectations and guidance raised

(Il Sole 24 Ore Radiocor) – Quarterly results that exceeded expectations, the second upward revision of guidance in just a few months, and plans to increase production driven by demand for AI chips. These are the factors winning over the market and driving up the share price of ASML in Amsterdam and, consequently, the European tech sector. Also on the AEX, ASM and BE Semiconductor are rising, whilst in Milan Stmicroelectronics is retracing after an initial rise.

Turning back to ASML, the Dutch company – which manufactures sophisticated lithography machines for the production of advanced semiconductors, including those for Nvidia – exceeded expectations for the second quarter with revenue of 9.326 billion euros (up from 8.767 billion in the previous three months) and a gross margin of 54 per cent (up from 53 per cent). Net profit rose to €2.918 billion from €2.757 billion, and basic earnings per share rose to €7.59 (from €7.15).Based on these figures, the group has raised its annual revenue forecast to a range of 43–45 billion euros, with a gross margin of between 54% and 56%. These figures are well above the consensus estimate of 39.3 billion and the company’s previous forecasts, which indicated revenue of between 36 and 40 billion, with a gross margin of between 51% and 53%.

“Ongoing investment in AI and steady progress in these technologies are driving demand for advanced logic and memory chips, further strengthening the growth prospects of the semiconductor sector,” explained Christophe Fouquet, Chairman and CEO of ASML . “Our customers, in turn, are continuing to accelerate their plans to expand production capacity,” he continued. “This translates into commitments from them across our entire product portfolio, which provides the company with greater visibility on long-term demand.” Building on this momentum and “an extremely strong order flow”, the company intends to increase its low-Na EUV capacity (its most advanced chip-making tool) by 30 per cent to 65 units. It has also outlined plans to increase it by a further 30 per cent by 2027 and is “assessing” the possibility of increasing capacity by a further 30 per cent the following year. The challenge for ASML is, in fact, to keep pace with demand from the major chip manufacturers that train and operate AI.

Although some investors had expected a more substantial increase in capacity for 2027 – with around 90–100 machines compared with the approximately 85 forecast by the company – “demand is so strong that ASML is willing to provide the market with clear, data-driven forecasts two years in advance”, explain analysts at Citi. Added to this is the fact that, according to experts, a further 30 per cent growth in 2028 would take the company’s production above estimates. JPMorgan echoes this view, believing that ASML’s plans point to earnings potential in 2028 that is far higher than the consensus. Furthermore, “second-quarter results and third-quarter estimates are better than expected”, they add, suggesting an upward revision to the consensus. Generally speaking, market participants view ASML’s results – the company’s share price having risen by around 77 per cent since the start of the year – as a breath of fresh air for the tech sector, which is constantly on the lookout for signs to justify the boom in AI investment.