ASML gains on earnings beat, but warns of China sales decline

ASML shares climbed over 3% in Wednesday morning trading after the Dutch chip equipment maker posted robust third-quarter earnings and pointed to growing traction from AI-related demand across its customer base.

The Dutch chip giant posted third-quarter revenue of €7.5 billion, in line with its own guidance. Net income for the period was €2.1bn, with earnings per share of €5.49 — just above analyst expectations of €5.44. Although sales fell slightly short of market forecasts of €5.74, the company’s strong outlook for the final quarter helped reassure investors.

Europe's biggest company in terms of market capitalization now expects fourth-quarter sales between €9.2bn and €9.8bn, with a gross margin of up to 53%.

For the full year, ASML is forecasting 15% growth in total net sales, underpinned by strength in advanced chipmaking and AI investments.

"Our third-quarter total net sales of €7.5bn and gross margin of 51.6% were in line with our guidance, reflecting a good quarter for ASML,” said president and CEO Christophe Fouquet in a statement.

"On the market side, we have seen continued positive momentum around investments in AI, and have also seen this extending to more customers, both in leading-edge Logic and advanced DRAM," he added.

The firm highlighted the shipment of its first product aimed at advanced packaging — the TWINSCAN XT:260 i-line scanner — offering a fourfold productivity boost compared to existing tools.

This marks ASML’s move into the 3D integration space, a critical area as chip architectures evolve.

ASML will pay an interim dividend of €1.60 per share on 6 November 2025. It also bought back €148 million in shares during Q3 under its ongoing €12bn repurchase programme, which began in 2022. To date, €5.9bn of that has been executed.

AI and EUV remain central to ASML's growth story

ASML continues to benefit from the rise in AI-driven chip demand, which is broadening across its client base.

Both leading-edge logic and advanced DRAM (Dynamic Random-Access Memory) customers are investing more heavily. Logic and DRAM are both specific types of computer chips.

The company’s partnership with French AI firm Mistral is also drawing attention, as it aims to embed AI across its entire product portfolio to enhance throughput and efficiency.

China slowdown flagged, but no drop expected in 2026 sales

Despite upbeat near-term guidance, the company struck a cautious note on its business in China.

Management flagged a significant decline in Chinese revenue starting in 2026, following exceptionally strong years in 2024 and 2025.

However, it does not expect total 2026 net sales to fall below 2025 levels. Analysts at Goldman Sachs characterised the tone as mixed — encouraged by strong fourth-quarter guidance and steady EUV demand, but slightly reserved on the 2026 outlook. Extreme ultraviolet (EUV) is a technology used to make advanced chips.

Goldman Sachs sees mixed reaction, cautious on 2026 outlook

Analysts at Goldman Sachs characterised the ASML tone as mixed—encouraged by strong fourth-quarter guidance and steady EUV demand, but slightly reserved on the 2026 outlook.

In a note shared on Wednesday, analyst Alexander Duval highlighted that ASML’s statement says that it does not expect 2026 sales to fall below 2025 levels, but he noted the absence of a clear acceleration narrative for next year, particularly given the anticipated decline in China revenues.

According to the expert, the guidance may be deliberately conservative, pointing to improving trends in chip industry spending.

Duval also highlighted ongoing strength in demand for ASML’s EUV machines, growing interest in AI-related technologies, and a faster-than-expected ramp-up of its newest High NA systems.

Goldman Sachs maintains a €935 price target on the stock, around 10% above current levels.

The bank maintains a 12-month price target of €935, roughly 10% above current levels.