ASML's Q3 sales of €11.66 billion fell short of expectations, causing a stock dip despite a significant profit beat and strong long-term demand signals.
TL;DR
- ASML's Q3 sales missed expectations by €60 million, but net profit exceeded forecasts by €860 million.
- Customers are placing orders for ASML's tools as far out as 2030, indicating strong long-term demand.
- The company's stock has rallied 48% this year, making it sensitive to even small misses.
What happened
ASML reported Q3 sales of €11.66 billion, slightly missing the €11.72 billion analyst estimate. However, net profit stood at €4.96 billion, well above the expected €4.1 billion. This profit boost was partly due to a higher valuation of its Mistral AI investment, contributing about €0.5 billion. Earnings per share were €11.82, surpassing estimates of €10.76.
Looking ahead, ASML expects Q4 sales of €14.2 billion to €15.2 billion, beating estimates. For 2026, the company raised its sales forecast to €44 billion to €45 billion, up from a prior low end of €43 billion, indicating 36% growth. CEO Christophe Fouquet noted that some customers are placing orders for tools as far out as 2029 and 2030, providing long-term visibility.
The company also mentioned that its planned 2027 and 2028 output will not fully meet demand, and it is considering adding more than the 30% capacity increase it had previously planned for 2028. Other notable points include China staying at about 20% of sales, Samsung and TSMC planning to use High NA EUV machines in volume production, and memory system sales expected to grow about 75% this year.
Why it matters
The slight sales miss led to a dip in ASML's stock, highlighting the sensitivity of the market to even small deviations from expectations, especially given the stock's 48% rally this year. However, the significant profit beat and strong long-term demand signals provide a positive outlook for the company.
For investors, the key takeaway is ASML's strong market position and the growing demand for its tools, which are crucial for advanced semiconductor manufacturing. The company's ability to meet this demand will be a critical factor in its future performance.
Developers and startups in the semiconductor and AI sectors should take note of ASML's capacity constraints and the growing demand for its tools. This could impact the availability and cost of advanced manufacturing equipment in the coming years.
Key facts
- ASML's Q3 sales: €11.66 billion (missed €11.72 billion estimate)
- Q3 net profit: €4.96 billion (beat €4.1 billion estimate)
- Earnings per share: €11.82 (beat €10.76 estimate)
- Q4 sales forecast: €14.2 billion to €15.2 billion (beat estimates)
- 2026 sales forecast: €44 billion to €45 billion (up from prior low end of €43 billion)
- Stock price change in last 6 months: 11%
- 52-Week High: $1988
- Stock Price Target: $2314
Context
ASML is a key player in the semiconductor equipment industry, with a monopoly on extreme ultraviolet (EUV) lithography machines. These machines are crucial for manufacturing advanced chips, making ASML a vital supplier for companies like TSMC, Samsung, and Intel.
The growing demand for advanced chips, driven by the AI and data center boom, has led to increased orders for ASML's tools. However, the company's ability to meet this demand is a significant factor in its future performance and the broader semiconductor industry.
ASML's stock has been on a strong rally this year, reflecting the growing demand for its tools and the company's dominant market position. However, the market's sensitivity to even small misses highlights the importance of meeting expectations in the current environment.