ASML Holding NV Earnings - Q2 2026 Analysis & Highlights
ASML Holding NV reported strong second quarter 2026 results driven by exceptional demand for advanced lithography systems, with management raising full-year guidance and outlining significant capacity expansion plans for 2027-2028 to meet robust customer demand across both logic and memory segments.
Key Financial Results
Total net sales of €9.3 billion in Q2 2026, exceeding guidance due to higher-than-expected installed base management sales.
Net system sales of €6.6 billion, comprising €3.8 billion from EUV systems (including one high NA system) and €2.8 billion from non-EUV systems.
Gross margin of 54% in Q2, above guidance primarily due to high-margin components within installed base management business.
Net income of €2.9 billion in Q2, representing 31.3% of total net sales with earnings per share of €7.59.
Free cash flow of €1.3 billion in Q2 2026.
Cash, cash equivalents and short-term investments of €7.6 billion at quarter end.
Installed base management sales of €2.8 billion, approximately €300 million above guidance driven primarily by additional upgrade business.
Business Segment Results
Net system sales split nearly equally between logic at 51% and memory at 49%.
EUV system sales of €3.8 billion in Q2, including sales of one high NA system.
Expected 65 low NA EUV system shipments for full year 2026, resulting in year-over-year EUV net system sales growth of over 45%.
Approximately 130 immersion DUV system shipments expected for 2026, similar to 2025 output levels.
Non-EUV net system sales expected to grow around 25% this year driven by increased DUV shipments and strong adoption of optical and e-beam metrology products.
Installed base management sales expected to grow over 30% for full year 2026, driven by service revenue from expanding EUV installed base and customer demand for upgrades.
China-related business expected to represent around 20% of total net sales for full year, increasing in line with overall business mainly from increased mainstream logic demand.
Capital Allocation
Final dividend of €2.70 per ordinary share paid in Q2 2026 for 2025 results.
Total dividend for 2025 of €7.50 per ordinary share, including three interim dividends paid in 2025 and 2026.
First quarterly interim dividend of €1.88 per ordinary share for 2026, payable on August 5, 2026.
Share repurchases of approximately €1.1 billion in Q2 2026 under the 2026-2028 share buyback program.
Industry Trends and Dynamics
Strong end market demand has motivated customers to aggressively add capacity on leading edge nodes.
Customers revising capital expenditure plans upward for the year, with ASML increasing output to meet requests for additional lithography systems.
Aggressive capacity expansion plans equally strong in both advanced logic and DRAM segments.
Customers entering long-term agreements providing longer-term visibility and confidence to add significant capacity.
Continued investment in 3 nanometer capacity to support latest generation AI accelerators, plus expansion at 5 nanometer and 4 nanometer nodes.
2 nanometer node ramping rapidly to support next-generation HPC and mobile applications, with customers planning investment for 1.4 nanometer nodes.
Advanced logic foundry-related net system sales expected to grow over 25% this year.
Supply challenges driving up DDR and HBM prices, prompting significant DRAM fab expansion investments.
Memory-related net system sales expected to grow over 75% this year.
DRAM lithography intensity rising as customers migrate to advanced nodes including both EUV and DUV immersion.
EUV low NA growth driven by increased replacement of multi-patterning with more cost-effective single exposed EUV.
Process control intensity at advanced nodes leading to major traction in adoption of optical and e-beam metrology products.
Competitive Landscape
Intel Foundry using ASML high NA EUV technology on Intel 18A process node to produce subset of Intel Core Ultra Series 3 processor, marking important step in demonstrating high NA EUV readiness in production environment.
High NA EUV platform maturity improving towards level required for insertion into high volume manufacturing.
ASML working closely with customers to prove value of high NA technology for their process technology roadmaps.
Macroeconomic Environment
Rapid growth of AI-related demand in advanced logic and DRAM accelerating move toward more advanced lithography solutions and increasing lithography intensity.
Growth Opportunities and Strategies
Capacity expansion plans for 2027 include approximately 30% increase in low NA EUV capacity, with company close to being fully covered with orders.
2028 capacity planning includes investigation of further 30% low NA EUV capacity increase based on strong demand forecasts.
Immersion system capacity increases planned at 30% for 2027 with investigation of potential further 30% expansion for 2028.
All capacity increases planned based on existing footprint through optimization of existing clean room space.
Continuous optimization of manufacturing output through freeing up cabins, reducing cycle time, and working with supply chain partners.
Upgrade product development covering all different versions of EUV, low NA, and immersion systems to provide capacity solutions to existing customers.
Customers requesting acceleration of upgrade products and requesting new products planned for 2027 and 2028.
High NA EUV technology roadmap continuing to make good progress with platform maturity improving.
Capital Market Day scheduled for June 10, 2027 to update longer-term views reflecting market and technology dynamics.
Financial Guidance and Outlook
Full-year 2026 total net sales guidance of €43 billion to €45 billion, updated upward from previous guidance.
Full-year 2026 gross margin guidance of 54% to 56%.
Q3 2026 total net sales expected between €11 billion and €12 billion.
Q3 2026 installed base management sales expected around €2.9 billion.
Q3 2026 gross margin expected between 55% and 57%.
Q3 2026 R&D expenses expected around €1.2 billion and SG&A expected around €0.4 billion.
Effective tax rate for full year 2026 expected around 17%.
R&D expenses in Q2 of €1.3 billion and SG&A expenses of approximately €0.3 billion.
Operating leverage improving with top line growing 35% while OpEx implicitly growing only about 6%.
Current R&D team capable of pursuing aggressive innovation roadmap without substantial headcount increases.
New campus groundbreaking expected this year with capacity benefits realized beyond 2028.
Four to five high NA EUV systems expected to achieve revenue recognition in 2026.
2027 low NA EUV capacity expected to comprise primarily E-model tools with some F-model tools, providing better average selling price and gross margin profile than 2026 mix.
