After ASML (NASDAQ: ASML) released an earnings report that far exceeded expectations, Wall Street institutions have reached a clear consensus: the company is at the beginning of a multi-year growth cycle driven by AI computing infrastructure and storage technology upgrades. The explosive growth in orders, combined with strong performance guidance, confirms that the semiconductor equipment industry has reached a turning point.
Earnings Report Highlights
ASML’s fourth-quarter earnings report, released on January 28, showed an explosive rise in new orders, which surged to €13.2 billion, setting a new all-time high. This figure was nearly double the market’s general expectation, which ranged from €6.6 billion to €7 billion. This data signals that the semiconductor equipment industry has entered a strong upward cycle.
The order structure also showed a significant shift. Extreme Ultraviolet (EUV) lithography machine orders contributed €7.4 billion, far surpassing expectations. Notably, orders from memory chip customers accounted for 56% of the total, for the first time exceeding logic chip orders, highlighting that high-performance memory demands, such as HBM and DDR5, are becoming the core investment drivers in the industry.
ASML also provided strong guidance for 2026, forecasting a revenue midpoint of €36.5 billion, representing a year-on-year growth of about 12%. The current order backlog of €38.8 billion provides high visibility and certainty for revenue over the next two years.
“Crushing” Expectations: €13.2 Billion Orders
The most critical highlight of the quarterly earnings was the surge in new orders. ASML’s reported €13.2 billion in new orders for the fourth quarter, significantly surpassing the market consensus, which was estimated between €6.6 billion and €6.9 billion. This was an 89% to 93.6% increase over market expectations and far exceeded the most optimistic prediction of around €8 billion.
EUV orders alone accounted for €7.4 billion, well above analysts’ expectation of €4.4 billion. This demonstrates that customers are actively securing key equipment capacity in advance for future advanced processes, including those at the 2nm and below nodes.
By the end of 2025, ASML’s backlog has surged to a historical high of €38.8 billion. This scale not only fully covers the company’s sales expectations for 2026 but also extends visibility to 2027, providing strong certainty for future earnings.
Structural Shift: Exploding Demand for Memory Chips
This order data reveals a structural shift in the semiconductor industry cycle. In the fourth quarter, memory chip customers accounted for 56% of the total orders, corresponding to approximately €7.4 billion, surpassing logic chip orders (44%) for the first time. This highlights the growing demand for high-bandwidth memory (HBM) and DDR5, which are becoming the primary drivers of investment in semiconductor equipment.
UBS analysts pointed out that memory orders grew by 71% year-on-year, driven by two key trends: one is the critical shift from 6F² to 4F² for DRAM nodes, and the other is the continuous demand increase for HBM and DDR5 driven by AI applications. Customers are increasingly adding EUV layers in DRAM production.
Although memory chips have now surpassed logic chips in order volume, the logic chip sector is still showing strong momentum. Citi and Goldman Sachs both noted that logic chip customers are actively reassessing mid-term AI-driven demand and accelerating their capacity planning and equipment investment, reflecting a clear recovery and expansion in this segment.
2026 Guidance: High Certainty in Growth
Based on its substantial order backlog, ASML management has provided strong guidance for 2026. The company expects net sales to range between €34 billion and €39 billion, with a midpoint of €36.5 billion, which represents a year-on-year growth of about 12%. This is significantly higher than the previously expected low single-digit growth and is approximately 3.5% to 4% above market consensus.
In terms of profitability, management expects a gross margin range of 51% to 53% in 2026. From a product structure perspective, EUV sales are expected to experience significant growth, while deep ultraviolet (DUV) lithography sales are expected to remain stable.
In terms of regional income, management’s guidance reflects dynamic global demand. The company expects some regional markets’ revenue contribution to decline in the next year, and this structural adjustment has already been incorporated into the latest financial forecasts. This signals that ASML has confidence in the growth of other global markets and believes they are sufficient to support its overall revenue target.
Q4 Revenue and Profit Steady, Q1 Outlook Positive
In addition to the highly anticipated order data, ASML’s quarterly financial performance and short-term outlook remained strong. The company reported revenue of €9.72 billion for the fourth quarter, slightly higher than Citi’s estimate of €9.64 billion and the market consensus of €9.59 billion. This included the revenue recognition from two High-NA (High Numerical Aperture) EUV systems.
The gross margin for the quarter was 52.2%, slightly exceeding the market expectation of 52.0%. Earnings per share (EPS) stood at €7.34, slightly lower than some analysts’ predictions, such as Citi’s expected €7.61, but still within the company’s own guidance range.
For the first quarter of 2026, the company has provided a positive outlook: expected revenue will range between €8.2 billion and €8.9 billion, with a midpoint of €8.55 billion, significantly higher than the market’s previous estimate of €7.95 billion. Gross margin is expected to remain stable at 51% to 53%.
Wall Street Consensus: Company at the Start of a New Growth Cycle, Huge Potential for 2027-2028
Following the release of ASML’s latest earnings, major investment banks have reached a consensus: the company is at the beginning of a new technological upgrade cycle, and its current valuation does not fully reflect its growth potential for 2027 and 2028.
Citi maintains a “Buy” rating and a target price of €1,400, believing that market expectations for 2026 will be revised upward, with the most significant upside potential for 2027 and 2028. Citi forecasts sales of €44 billion in 2027 and an EPS of around €40, noting that the current expected P/E ratio of around 30x is still below its five-year average.
JPMorgan has given a “Overweight” rating with a target price of €1,300, calling the order performance a “blowout,” and believes there are almost no negative factors to worry about. They expect double-digit upward revisions in market expectations for 2027 and 2028 earnings.
Goldman Sachs maintains a “Buy” rating with a target price of €1,270, noting that the 2026 revenue guidance is about 5% higher than the market consensus, and the certification progress for High-NA lithography systems is smooth.
UBS also maintains a “Buy” rating with a target price of €1,400, emphasizing that the adoption of High-NA technology will become the core growth driver for the next phase, and believes the company’s current guidance remains conservative, leaving room for further upward revisions.