According to the latest performance report from ASML Holding NV, the semiconductor lithography giant, the Q3 orders exceeded market expectations. Driven by an unprecedented global rush towards AI, the arms race for AI infrastructure remains fervent, and company management exhibits optimism regarding the impacts of rare earth regulations as well as growth projections for 2026 to 2030. The Chief Financial Officer (CFO) stated that ASML has fully prepared for China's restrictions on rare earth products and related technology and equipment exports. As the earnings season kicks off, ASML's impressive performance significantly strengthens the narrative of a "long-term AI bull market" in global stock markets, reinforcing the "AI investment faith" among tech stock believers. This essentially indicates that the "super bull market" driven by AI computing power, dominated by NVIDIA, TSMC, Broadcom, and Micron Technology, is far from over, with the AI computing power supply chain expected to remain a favored investment sector for global funds in the near term.

Upon the release of its results, ASML's American Depositary Receipts (ADR) (ASML.US) rose over 4% in pre-market trading, with similar gains recorded in European markets. The latest results show a total of €5.4 billion in orders for Q3, surpassing the general market expectation of €4.9 billion, with orders for extreme ultraviolet (EUV) lithography systems reaching the highest level in nearly seven quarters. CEO Christophe Fouquet reaffirmed in the earnings statement that, with support from the AI boom, the company's net sales are expected to surge dramatically from €28.3 billion last year to €60 billion as part of its long-term growth target by 2030. During the earnings call, Fouquet noted, "We are indeed seeing a sustained positive growth momentum in AI spending and investments, extending to larger-scale clients. Our more advanced cutting-edge lithography equipment is expected to experience stronger growth."

Michael Roeg, a senior analyst at Degroof Petercam, remarked after ASML's latest results that the management's latest guidance was "much more enthusiastic" than earlier comments. He mentioned via email, "The outlook remains cautious as they anticipate a significant decline in lithography machine sales to China in 2026. This must be compensated by stronger sales to top-tier AI logic chip and memory chip clients in 2026."

How does ASML view the impact of "rare earth controls"? During Wednesday's earnings call, management shared further optimistic expectations. CEO Fouquet predicted that ASML's net sales in 2026 would not fall below the strong levels of 2025. Regarding the impacts of rare earth controls attracting global investor attention, CFO Roger Dassen stated on Wednesday that, while the broader chip manufacturing ecosystem's exposure is difficult to assess, the company has made ample preparations for China's critical export restrictions on rare earth materials. As per new regulations announced last week, China will require foreign companies to obtain formal approval from Beijing before exporting products containing even trace amounts of specific rare earths sourced from China.

Unquestionably, ASML uses some rare earth materials sourced from China in its magnet and battery supply chain. Reports last week quoted an informed source claiming that ASML's lithography machine shipments could face delays of several weeks due to these restrictions. However, CFO Dassen downplayed these concerns during the earnings call with analysts. "Our lead times for lithography equipment are quite long, so in our supply chain system, we ensure we have the crucial materials needed in the coming months. We are fully prepared for this. The company’s supply chain has sufficient materials to fulfill our customer orders," Dassen stated after the Q3 results.

Some analysts believe that the new regulations on rare earth and magnetic material exports will have a manageable short-term impact on ASML, primarily reflecting "weekly" disruptions in specific shipping timelines. Based on the need for the Trump administration to maintain close ties with the Chinese market, the likelihood of substantial mid-term (2026-2028) harm to ASML is relatively low, which appears more as supply chain execution risks rather than a fundamentally disruptive event for growth. This new policy marks Beijing's first significant jurisdictional measure targeting the global chip supply chain, particularly impacting foreign companies. Previously, a series of initiatives by President Donald Trump escalated the US-China trade war, culminating in a threat last Friday to impose an additional 100% tariff on China and enforce export controls on critical software.

ASML’s lithography equipment is vital for global chip manufacturing; however, the company has long been caught between the tensions of trade between Beijing and Washington. Statistical data indicates that net system sales in China accounted for 42% of ASML's total sales in Q3, up from 27% in the previous months, becoming the company's largest market for the quarter. Furthermore, the Trump administration may tighten restrictions on ASML's sales in the Chinese market: last week, a US House committee stated that ASML and other semiconductor equipment manufacturers are purportedly aiding the development of China’s chip sector and called for stronger controls over lithography machine sales. Due to US-led restrictions, ASML has never been able to sell its more advanced EUV lithography machines to China, with Chinese sales largely focused on lithography equipment that supports mature processes. Last year, under pressure from the US government, the Dutch government prevented the sale of immersion deep ultraviolet lithography systems—its second most advanced model—to China.

ASML's strong recent performance and optimistic outlook—a hallmark of "human technological pinnacle"—notably reinforce the market’s expectation of thriving AI computing power supply chains continuing strongly. Since September, with the transition of the "more expensive next-generation EUV lithography machines—High-NA lithography machines from laboratory validation to implementation at chip manufacturers" alongside investments in Mistral AI, ASML's stock price has entered a significant upward trajectory. In September, ASML's ADR (ASML.US) recorded the best single-month performance in twenty years, soaring by as much as 45% since 2025, with over 40% growth since September. The core logic behind this surge is driven by investor optimism that the accelerated construction of AI infrastructure will significantly push TSMC and other chip manufacturers to expand their advanced AI chip production capacity at 3nm and below, ultimately leading to a surge in semiconductor equipment orders.

Recent surges in prices for high-performance DRAM and NAND series storage products, along with unexpectedly high contract backlogs of $455 billion reported by cloud computing giant Oracle, and OpenAI— the world's most highly valued AI startup—having secured over $1 trillion in AI computing infrastructure deals, all reinforce the "long-term bull market narrative" for segments supporting AI GPU, ASIC, and HBM, data center SSD storage systems, liquid cooling systems, and core power equipment.

The need for AI computational capabilities driven by generative AI applications and AI agents represents an "ocean of stars," potentially propelling the AI computing infrastructure market toward exponential growth, with the "AI inference systems" being a principal revenue source anticipated by NVIDIA CEO Jensen Huang. Wall Street titans Morgan Stanley, Citigroup, Loop Capital, and Wedbush view the global investment wave focused on AI infrastructure centered around computing power hardware as far from over; it remains at an early stage. Under unprecedented demand storms for AI computing power, this investment wave could reach as high as $2 trillion to $3 trillion.

Moreover, NVIDIA CEO Huang has projected that AI infrastructure expenditure may reach between $3 trillion to $4 trillion before 2030, expecting that the scale and scope of such projects will present significant long-term growth opportunities for NVIDIA. Citigroup analysts recently substantially raised their AI infrastructure spending forecasts for leading tech giants, including Microsoft, Google, Amazon, Meta, and SAP, adjusting the 2026 AI infrastructure spending forecast from $420 billion to $490 billion. Additionally, Citigroup anticipates that cumulative AI infrastructure expenditure by tech giants may rise from $2.3 trillion to $2.8 trillion by 2029, expecting the global AI infrastructure compound annual growth rate to reach 56%.

Furthermore, according to estimates, the global demand for AI computational capabilities could add 55 gigawatts of power capacity by 2030, translating to a potential increase of up to $2.8 trillion in AI computing-related spending, with the US market accounting for $1.4 trillion. Recently, Wells Fargo published an optimistic report on the semiconductor equipment industry, asserting that as global AI infrastructure construction led by tech giants such as Microsoft, Google, and Meta heats up, it will significantly accelerate capacity expansions for advanced 3nm and below chips and advanced packaging processes. The long-term bull market logic in the semiconductor equipment sector remains exceptionally robust. ASML is one of Wells Fargo's long-term favored semiconductor equipment stocks. The bank asserts that all news related to boosting advanced AI chip capacity is positive and constructive for semiconductor equipment. The intricacies of architecture updates—much more complex and robust performance in CPU/GPU packaging heterogeneity (based on NVLink interconnection as well as CoWoS/EMIB/Foveros advanced packaging)—will significantly enhance structural demand for EUV/High-NA lithography, advanced packaging equipment, and metrology, benefiting ASML, Applied Materials, and KLA and other semiconductor equipment manufacturers.