Whalesbook
ASML Holding N.V. (ASML) delivered a strong first quarter, surpassing market expectations for both revenue and net profit. The lithography equipment manufacturer reported net sales of €8.8 billion, exceeding the €8.5 billion anticipated, with net profit reaching €2.8 billion against a projected €2.5 billion. This performance offers a strong boost despite broader market uncertainties.
2026 Outlook Revised Higher
Adding to the positive sentiment, ASML substantially revised its sales target for 2026. The company now projects net revenues for the full year 2026 to fall between €36 billion and €40 billion. This marks an increase from its previous guidance, which estimated net revenues in the range of €34 billion to €39 billion, signaling robust confidence in future demand.
Drivers of Growth
The upward revision is primarily propelled by an insatiable demand for artificial intelligence (AI)-related chips. Memory semiconductors, vital for data centers and AI systems, are seeing prices surge due to persistent shortages. This scarcity is driving increased production capacity needs from major players like Samsung and SK Hynix, who rely on ASML's advanced equipment.
In the first quarter, sales of new memory tools to customers represented a significant 51% of ASML's total new tool revenue, a notable jump from 30% in the prior quarter. Taiwan Semiconductor Manufacturing Co. (TSMC), one of ASML's largest clients, also reported record first-quarter sales last week, further highlighting the strength in the AI chip market.
Navigating Export Restrictions
Despite the strong overall performance, ASML faces ongoing challenges related to China. Stringent export regulations prevent the company from shipping its most advanced machinery to the region. Compounding these difficulties, a bipartisan group of U.S. lawmakers recently introduced legislation that could also restrict the shipment of ASML's less sophisticated machines to China, a proposal still awaiting legislative approval.
Consequently, system sales to China saw a decline, representing 19% of ASML's total sales in the first quarter, down from 36% in the December quarter. This shift highlights the growing geopolitical pressures impacting global technology supply chains.