Recently, ASML Holding NV (ASML.US) conducted its Q3 earnings call for fiscal year 2025. The company projects that its total net sales for 2026 will not be lower than those of 2025. The EUV business is expected to benefit from the demand for advanced DRAM and cutting-edge logic chips, indicating growth ahead. Conversely, the DUV business may decline in comparison to 2025 due to dynamics affecting Chinese customers. ASML noted that the positive momentum generated by AI is expanding to more logic and DRAM clients, with a growing number of clients applying EUV lithography layers. Although the many positive developments in AI infrastructure won’t immediately translate into orders, cumulatively, they create significant future potential opportunities for the company. Importantly, ASML is seeing AI opportunities extend to a broader base of logic and DRAM clients, which not only increases the customer base but also ensures capacity to meet future massive market demands, representing a positive long-term signal.
On the capacity front, ASML indicated that it has been preparing for growth for several quarters now and is continuously monitoring these dynamics. Anticipating a strong demand for EUV next year, the company is ready to meet it and is also planning long-term capacity, closely observing the market to ensure demand is met without concerns currently. The company forecasts total net sales for 2025 to be approximately €32.5 billion, with a gross margin of about 52%. It maintains its financial targets for 2030, expecting revenue between €44 billion and €60 billion, with a gross margin goal of 56% to 60%.
During the Q&A session, when asked about the “positive news” alleviating uncertainty over demand for 2026, ASML responded that the cumulative news related to AI infrastructure has created significant future potential opportunities, even if not immediately reflected in orders. Furthermore, it highlighted that opportunities from AI are expanding to more logic and DRAM clients, which increases the customer base and capacity to meet enormous market demand. However, it is too early to determine the impact of these factors on demand over the next few years, especially 2026.
Regarding expectations for the Chinese market, ASML noted that the visibility for 2026 is similar to last year and embraced a clear viewpoint: the Chinese market, having experienced unusually high cycles in the past 2 to 3 years, especially in the recent two years, is expected to revert to more reasonable business levels in 2026.
Questions were raised on the distribution trend of orders and revenues for 2026, alongside potential impacts from AI investments in 2027. ASML indicated that while it has a view for 2026, discussing the details for 2027 is premature. The order momentum appears strong over the past two quarters, but orders typically arrive in "batches" rather than in a linear distribution. The flow of positive information from recent months supports a favorable medium-term outlook but translating it into specific expectations for 2027 is still early.
In terms of DRAM demand, ASML noted that while currently strong, transitioning from 6F² to 4F² architecture is perceived by some as negative for EUV due to reduced layer numbers. ASML clarified that it does not believe this to be the case, as they expect EUV layer numbers to continue to grow with the advancement of the 4F² roadmap, which requires more complex lithography mask layers.
ASML emphasized its commitment to growth in the EUV sector, indicating that it has been preparing for increased demand for several quarters, continuously tracking market dynamics to ensure they can meet future requirements. The company expressed confidence in its ability to fulfill long-term capacity needs despite uncertainties about market demand.
The Q3 earnings call painted a generally optimistic picture for ASML, highlighting ongoing strategies to leverage AI developments, manage long-term capacity planning, and adapt to market changes while maintaining financial stability and growth.