ASML is scrambling to build more capacity after blockbuster beat-and-raise quarter

By Nora Redmond

ASML's stock rose more than 4% before the opening bell.

Shares of ASML Holding NV jumped on Wednesday after the semiconductor heavyweight raised its forecast for the year.

Semiconductor-equipment manufacturer ASML reported that it was lifting its outlook for net sales from a previous range of EUR36 billion ($41 billion) to EUR40 billion to between EUR43 billion and EUR45 billion for the full year - an increase of 19% at the lower end and 12.5% at the higher end. It boosted its gross margin forecast for 2026 from 51% to 53% to between 54% and 56%.

ASML shares (NL:ASML) jumped 4% in Amsterdam trade. The U.S.-listed American depository receipt (ASML) has gained 66% this year.

As the only group worldwide that develops the extreme ultraviolet (EUV) lithography machines needed to power microchips, ASML's value has soared as the race to dominate in the artificial-intelligence industry picks up steam. It today stands as Europe's largest company by market capitalization, which is at EUR594 billion, according to FactSet.

ASML reported revenue of EUR9.3 billion in its second quarter, higher than analysts' estimates of EUR8.81 billion, according to London Stock Exchange Group, and an increase of more than 20% year-on-year.

Earnings per share in the second quarter rose 26.5% compared to the same period last year to EUR7.59, beating Wall Street consensus of EUR6.80, according to LSEG.

CEO Christophe Fouquet said in the company's results video for the period ended June 30 that the revised forecast for 2026 was driven by a boost in demand from customers amid increasing capital expenditure budgets to accelerate plans to develop AI.

"This really creates a need for more systems basically starting this year," he said. "We are doing the same on our side, extending output, extending basically our teams so that we can support them moving forward."

Fouquet said ASML, which counts Intel (INTC), Samsung Electronics (KR:005930) and Taiwan Semiconductor Manufacturing Corp., or TSMC (TW:2330), as some of its biggest clients, was close to receiving all the orders it could for EUV systems for next year, even having increased capacity for 2027 from around 65 to about 84.

"When we look at 2028, we have received already a large number of orders from our customers for EUV," the French boss said. "This has also invited us very strongly to investigate another 30% increase in our EUV capacity for 2028."

Analysts at Jefferies, led by Janardan Menon, wrote in a note on Wednesday that the expansion in capacity comes as "underwhelming."

They said the 30% addition was "below market expectations which have climbed sharply recently."

Analysts at Citigroup, led by Andrew Gardiner, said that as these are one- to two-year forecasts, they expect further hikes in capacity projections to come over time as demand is strong.

"Positive supply/demand tension with customers is no bad thing either when it comes to future pricing and margins," the analysts wrote in a note on Wednesday.

-Nora Redmond

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