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This Month's Featured Article
ASML Falls Post-Earnings, Chip-Making Expansion Anchors OutlookAuthored by Leo Miller. Published: 4/16/2026. 
Key Points
- After shares of ASML boomed in 2025 and continued gaining in 2026, markets sold off after the company's latest earnings report.
- However, ASML significantly raised its full-year guidance, providing a strong positive indicator going forward.
- Rising chip-making capacity is a key tailwind, while ASML's Chinese business is a pressure point.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
Semiconductor manufacturing equipment maker ASML Holding (NASDAQ: ASML) took off in 2025 and hasn’t looked back. Shares delivered a total return of nearly 56% last year, and 2026 has continued that momentum. The stock is up more than 35% year-to-date, despite a 2.4% decline after ASML's latest earnings report. Given the recent gains, the encouraging results and the long-term outlook, investors remain constructive on the stock. Here's what investors need to know. ASML Earnings: Solid Beats, Mixed Guidance
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In Q1 2026, the Dutch advanced lithography maker saw sales rise 13% year over year (YOY) to €8.77 billion (about $10.35 billion), slightly above analyst estimates of $10.24 billion. The firm also beat on the bottom line, posting diluted earnings per share of €7.15 (about $8.44), a 19% YOY increase that comfortably exceeded estimates of €7.68 per share. Guidance for Q2 was lighter than analysts expected. At the midpoint, ASML forecasts revenue of €8.7 billion (about $10.27 billion), while analysts were looking for €9.08 billion (about $10.72 billion). Because its machines are so expensive, sales can be lumpy quarter to quarter. Notably, the company’s most advanced high-NA extreme ultraviolet lithography system costs around $400 million. If ASML expected to sell one more of these systems next quarter, its guidance would be nearly in line with expectations. That lumpiness is why ASML's annual guidance is often a fairer gauge. The company raised its midpoint full-year 2026 sales outlook to €38 billion (about $44.84 billion), up from a previous midpoint of €36.5 billion (about $43.07 billion), and ahead of estimates of €37.75 billion (about $44.55 billion). Still, the full-year beat was modest and Q2 guidance missed expectations. Investors often overweight near-term guidance, expecting greater certainty from those numbers, which likely contributed to the post-earnings decline given that strong performance was already priced in. Looking ahead, two dynamics to watch are ASML's constrained near-term sales capacity and developments in China. Manufacturing Buildouts Support Strong Multi-Year DemandASML’s near-term sales are constrained by customers’ limited ability to install additional equipment. Many logic and memory customers lack the clean-room space needed to accommodate ASML’s machines. Adding meaningful clean-room capacity requires building new fabrication facilities—a process that can take years. Expansions are underway, but they will take time to come online. For example, Taiwan Semiconductor Manufacturing (NYSE: TSM) expects to spend roughly $54 billion on capital expenditures (CapEx) in 2026, a significant 32% increase year over year versus 2025. Micron Technology (NASDAQ: MU) forecasts CapEx will rise 81% YOY to $25 billion, and expects that figure to move higher in 2027. Samsung Electronics (OTCMKTS: SSNLF) projects about $28 billion in CapEx for 2026, while SK Hynix's is roughly $24.5 billion. Many of these new facilities won’t be operational until 2027 or 2028. Demand for ASML’s machines is robust, but the company's ability to convert that demand into near-term sales is limited until customers expand their facilities. As those buildouts come online, this constraint should ease—a key driver of ASML’s long-term outlook. China Sales Drop, MATCH Act LoomsSales to China fell about 23% YOY, dropping to 19% of total revenue. That reflects a normalization after Chinese customers front-loaded purchases in 2025 ahead of export controls. Still, ASML’s business in China could weaken further if new legislation is enacted. A bipartisan group in Congress recently introduced the Multilateral Alignment of Technology Controls on Hardware (MATCH) Act. The proposed law would ban the sale of deep ultraviolet (DUV) lithography systems to China. DUV accounts for a large portion of ASML’s China sales; the company has never sold EUV systems there. A DUV ban would therefore significantly reduce ASML’s remaining market in China. ASML says its 2026 guidance range “accommodates potential outcomes of ongoing discussions around export control.” ASML: Chip Equipment Stalwart Up Against High ExpectationsASML remains well-positioned, especially given favorable long-term demand trends. China represents a material risk, but the outcome of the MATCH Act is uncertain. As of mid-April 2026, ASML appears neither substantially undervalued nor overvalued, and analysts at major investment banks maintained their Buy ratings after the latest earnings report. |
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