Shares in ASML have climbed 63% since the start of the year.
The third-quarter earnings season is kicking off on Tuesday, and semiconductor heavyweight ASML Holding will get the ball rolling for the technology sector on Wednesday.
The world's only manufacturer of extreme ultraviolet lithography machines, which are used to product microchips, is set to report its financial results for July through August before the opening bell in Amsterdam, the Netherlands, or at about 1 a.m. Eastern.
Analysts polled by the London Stock Exchange Group expect revenue to rise about 58% year-on-year to EUR11.85 billion ($13.26 billion).
It comes as semiconductor stocks have had a banner year amid hyperscalers boosting their artificial-intelligence capital expenditure to quickly fund the buildout of the tool as the race to dominate in the industry fuels on. The PHLX semiconductor exchange-traded fund SOXX has climbed 79% since the start of the year.
Shares in the 42-year-old Dutch company (ASML) fell 0.8% in early trading in New York, with stock up 63% overall since January. ASML's Amsterdam-listed shares (NL:ASML) have advanced by about the same amount in that period, bringing its market capitalization to EUR602 billion ($673.73 billion), according to FactSet - maintaining its spot as Europe's largest company by market cap.
Analysts forecast earnings per share doubling compared to this time last year to $11.01. Gross profit is anticipated to come in at EUR6.57 billion, or $7.35 billion, which would mark an increase of 69% year-on-year. They see profit margins reaching 55.88%, versus last year's 51.63%.
For Sandeep Deshpande, head of European technology at JPMorgan, ASML could have the room to slightly lift its guidance for the full year because of its potential for stronger shipments of its deep-ultraviolet lithography systems.
"The company should indicate robust order trends and continuing demand strength," he wrote in a recent note. "ASML has outperformed its semiconductor equipment peers in a weak semiconductor tape in the past quarter."
The Dutch company is currently expecting sales of between EUR43 billion and EUR45 billion in 2026, with a full-year gross margin of between 54% and 56%.
Analysts at Morgan Stanley, led by Lee Simpson, wrote in a note that they think investors will be focused on capacity. In 2026, ASML projects a low-NA EUV capacity of about 65 tools, with 80 to 85 in 2027.
The analysts see management raising its guidance to over 90 tools for next year. "We think recently achieved manufacturing efficiencies provide more flexibility than the market recognizes," they said.
Analysts at Cantor, headed by C.J. Muse, wrote in a note over the weekend that they view ASML's stocks as "ripe for overperformance." They believe the market is currently not pricing in the company's path to gross margins of 60% into 2028 and relatively new CEO Christophe Fouquet's continued push to drive operating leverage, which is the ratio of a company's fixed costs to its variable costs.
They added that these efforts could make ASML "the top incremental operating margin provider in all of semi cap."
-Nora Redmond