ASML Holding NV Earnings - Q1 2026 Analysis & Highlights
ASML Holding NV reported strong Q1 2026 results driven by robust demand for advanced lithography equipment, particularly EUV systems for AI-related infrastructure investments, with significant capacity expansion plans announced for 2027 and updated full-year guidance reflecting improved immersion and deep UV outlooks.
Key Financial Results
Total net sales of €8.8 billion in Q1 2026, within guidance.
Net system sales of €6.3 billion, comprising over €4.1 billion from EUV system sales (including two High NA systems) and over €2.1 billion from non-EUV system sales.
Installed base management sales of €2.5 billion, slightly above guidance.
Gross margin of 53% for Q1, at the high end of guidance, primarily due to high-margin components in installed base business.
Net income of €2.8 billion, representing 31.4% of total net sales, with earnings per share of €7.15.
Cash, cash equivalents and short-term investments of €8.4 billion at quarter end.
Q1 free cash flow of negative €2.6 billion, largely driven by timing of down payments.
R&D expenses of €1.2 billion and SG&A expenses of €0.3 billion** in Q1.
Effective tax rate of 17.1% for Q1, with expected annualized rate of approximately 17% for full year 2026.
Business Segment Results
Net system sales split nearly equally between logic at 49% and memory at 51%.
EUV revenue expected to rise significantly in 2026, driven by advanced logic and DRAM market dynamics.
Non-EUV revenue expected to grow from previous expectations of flat performance, due to continued demand momentum for deep UV lithography.
Installed base management revenue expected to grow significantly in 2026, driven by service revenue from expanding EUV installed base and customer demand for performance upgrades.
Capital Allocation
Dividend of €1.60 per ordinary share paid as third interim dividend over 2025.
Total dividend for 2025 of €7.50 per ordinary share, representing a 17% increase compared to 2024.
Final dividend proposal of €2.70 per ordinary share to the annual general meeting.
Share repurchases of approximately €1.1 billion in Q1 2026.
Industry Trends and Dynamics
AI-driven infrastructure investment is the primary driver of semiconductor industry growth outlook.
Demand continues to outpace supply for the foreseeable future, creating constraints across end markets from AI to mobile and PCs.
Memory customers report being sold out for the remainder of 2026, with supply limitations expected to persist beyond 2026 despite significant capacity additions.
Logic customers adding capacity across multiple advanced nodes to support demand, while continuing to ramp the 2-nanometer node for next-generation HPC and mobile applications.
Supply limitations expected across advanced nodes beyond 2026 in the logic business.
Both memory and logic customers increasing capital expenditures and accelerating capacity expansion plans, supported by long-term agreements with their own customers.
Continued adoption of EUV and immersion deep UV on new process nodes by advanced DRAM and logic customers, further increasing lithography demand.
DRAM has experienced major adoption of EUV in 2025, with US DRAM customers also shifting strongly toward EUV.
DRAM customers achieving high profitability due to memory pricing, reducing hesitation to invest in capacity expansion.
Competitive Landscape
Multiple foundry players gaining market share as demand outweighs supply, creating room for Samsung and Intel beyond the market leader.
Samsung's Taylor fab plans are real and require equipment shipments from ASML.
US foundry player already has significant capacity, so ASML is not counting on large shipments from this player in 2026.
Market with multiple players guarantees innovation, with potential for even more innovation than a dominated market.
High NA platform demonstrates competitive advantages with ability to replace complex multi-patterning processes, reducing process steps by a factor of 10 for some critical layers.
Macroeconomic Environment
Export control discussions ongoing, with 2026 guidance bandwidth accommodating potential outcomes.
China business expected to remain at approximately 20% of total business at midpoint, with this view unchanged.
Immersion growth coming from non-China customers, as China remains at expected 20% level.
Growth Opportunities and Strategies
Capacity expansion plan targeting at least 60 Low NA EUV systems in 2026.
Immersion system output planned close to 2025 levels despite slow start earlier in year.
Move rates increasing quarter-by-quarter for HBM products, with Low NA EUV capacity raised to at least 80 systems for 2027.
Deep UV and application products scaling in alignment with EUV capacity increases.
Low NA EUV productivity roadmap updated with ability to reach at least 330 wafers per hour at start of next decade.
1,000-watt source demonstration achieved, enabling continued source power improvement.
NXE:3800E system upgrade providing 10 wafer per hour increase, with 230 wafers per hour available immediately to all customers.
NXE:3800F system specification raised from 250 to 260 wafers per hour, with shipping planned for 2027 and full volume in 2028.
High NA platform processed over 0.5 million wafers and achieved over 80% availability.
High NA supporting single exposure for at least three nodes in logic and DRAM, with line pitches of 18 nanometer for logic and contact pitches below 28 nanometer for DRAM.
Supply chain preparation paying off, with Zeiss and optics suppliers in much better shape than in previous ramps.
NXE:3800E tool maturity significantly improved, allowing great progress on cycle time in factory.
Productivity upgrades accelerated, allowing customers to get capacity immediately through software switches and qualification.
3D integration becoming important for customers to deliver density in logic and DRAM, with ASML creating activities to support customers.
Wafer-to-wafer bonding support through holistic lithography product combining metrology and process control tools.
Advanced packaging entry with XT:260 tool showing good traction.
Hybrid bonding support under development, with limited current use but future discussion potential.
Financial Guidance and Outlook
Q2 2026 total net sales guidance of €8.4 billion to €9 billion.
Q2 installed base management sales expected around €2.5 billion.
Q2 gross margin guidance of 51% to 52%.
Q2 R&D expenses expected around €1.2 billion and SG&A around €0.3 billion.
2026 revenue guidance updated to €36 billion to €40 billion, narrowed and increased from previous range.
2026 gross margin guidance maintained at 51% to 53%, with revenue weighted to second half of year.
EUV revenue expected to raise significantly in 2026 driven by advanced logic and DRAM dynamics.
Non-EUV revenue expected to grow due to continued demand momentum for deep UV lithography.
Installed base management revenue expected to grow significantly in 2026.
2027 Low NA EUV capacity planned at least 80 systems, reflecting ongoing customer discussions.
2027 EUV tool mix expected to be primarily E models with some F models, with no D models.
2027 ASP expected to improve over 2026 due to more favorable mix with no D models and multiple F models.
Deep UV total capacity of 600 tools considered sufficient, with scaling aligned to EUV demand.
Immersion demand for non-Chinese customers expected to scale with EUV demand.
Capital Markets Day in 2026 expected to provide updated long-term market analysis and guidance.
Technology Development and Product Innovation
High NA platform maturity progressing with customers testing on real product wafers in both logic and DRAM.
High NA adoption potential increasing as capacity requirements remain strong and tool maturity improves.
DRAM threshold for High NA adoption relatively low, particularly for existing products.
Resist and ecosystem progress enabling High NA line and pitch targets.
High NA replacing complex multi-patterning processes, with single High NA exposure replacing three or four Low NA exposures.
