Earnings Preview | ASML (ASML.US) AI Premium Faces Q3 Earnings Test: EUV Orders and Performance Guidance May Decide Stock Performance

According to Zhitong Finance APP, lithography machine giant ASML (ASML.US) will announce its third-quarter results before the U.S. market opens on Wednesday, October 14th. This Dutch semiconductor equipment manufacturer has become one of the biggest beneficiaries of the artificial intelligence (AI) infrastructure boom, as its extreme ultraviolet (EUV) lithography machines are indispensable for TSMC, Samsung, and Intel to produce the most advanced semiconductors. With semiconductor manufacturers expanding capacity for AI accelerators, high-bandwidth memory, and advanced logic chips, ASML's U.S. shares have risen by more than 67% so far this year.

Therefore, this latest financial report will allow investors to judge whether demand for the company’s advanced lithography systems remains robust enough to support its AI-premium valuation. While revenue figures are certainly important, expectations for order intake and 2027 performance guidance could have a greater impact on the stock’s post-earnings movement, especially given the market’s already-high expectations for its outstanding growth performance.

It is worth noting that ASML’s third-quarter earnings report will be released before the U.S. market opens on Wednesday, which is also the same day the U.S. September Consumer Price Index (CPI) will be announced. This combination could result in significant volatility for ASML’s stock price—the earnings results will affect the market’s specific expectations for the company, while the CPI will influence U.S. Treasury yields and the valuation of the tech sector.

Earnings Expectations

Previously, ASML projected third-quarter revenue to be between 11 billion and 12 billion euros, with a gross margin of 55%-57%. The market currently expects its third-quarter revenue to be about 11.66 billion euros, equivalent to around $13.2 billion, and earnings per share to be about $12.47.

ASML also expects revenue from Installed Base Management—including services and equipment upgrades—to reach around 2.9 billion euros. This recurring business is very important because its profit margins may be higher than those of new equipment sales, and as more ASML machines are deployed in customers’ fabs, the company will benefit from this as well.

Data shows that ASML’s second-quarter revenue was 9.33 billion euros, exceeding the company’s previous guidance. Net profit reached 2.92 billion euros, with earnings per share of 7.59 euros. Installed Base Management revenue reached 2.76 billion euros, surpassing management’s prior forecasts and boosting gross margin to 54%.

After announcing second-quarter results, ASML raised its full-year revenue guidance to 43-45 billion euros. The company also raised its annual gross margin expectation to 54%-56%. The updated full-year revenue guidance is significantly higher than analysts’ expectations of approximately 39.6 billion euros before the announcement. Management attributed the upward revision to accelerated investments in advanced logic chip and memory chip capacity.

For the third quarter, investors will focus on whether ASML maintains or again raises this full-year guidance. If the company raises the lower end of its full-year revenue range, it would be particularly supportive, as this would indicate equipment shipments and service revenue will remain strong in the fourth quarter.

EUV Orders May Matter More Than Revenue

Quarterly revenue largely reflects equipment orders placed months or even years earlier. In comparison, net orders provide a more forward-looking view of demand, and may thus determine whether investors perceive this earnings report as strong or disappointing.

ASML is the only company in the world capable of mass-producing EUV lithography systems commercially. These machines use extremely short-wavelength light to pattern the complex and precise designs required for advanced semiconductors. Low-NA EUV systems have become essential for advanced logic and high-end memory chips. The next-generation High-NA EUV platform is designed to support future process nodes with smaller features, higher density, and greater performance.

Currently, demand comes mainly from these areas: TSMC is expanding its capacity to produce AI processors for Nvidia, AMD, and custom chip developers; Samsung and SK Hynix are investing in advanced memory chips for AI data centers; Intel is deploying High-NA EUV in selected advanced processes; cloud computing companies are funding extra foundry capacity for custom AI accelerators; chip manufacturers are upgrading existing equipment to improve productivity and yield.

ASML stated in July that customer commitments to its entire product portfolio are strengthening, and the order intake for the first half of 2026 has been exceptionally strong. If third-quarter EUV orders increase, this would further reinforce the view that AI infrastructure investments are translating into long-term equipment demand, rather than just a temporary spike in orders.

It is important to note that a weaker order figure does not necessarily mean demand is collapsing, as order numbers can fluctuate significantly between quarters. However, if customer commentary becomes more cautious, or if there are delays to 2027 capacity plans, this could trigger more substantive concerns.

High-NA EUV Closer to Commercial Production

High-NA EUV is one of the most important components of ASML’s long-term growth story. The new generation of machines can provide higher resolution than current EUV platforms, with the potential to reduce the number of steps needed to manufacture advanced chips. Each machine can cost up to $400 million, so High-NA adoption is very important for ASML’s revenue growth and average selling price.

In the second quarter, ASML achieved an important milestone: Intel has completed qualification of High-NA EUV for certain Intel 18A product layers. The company said its current fleet of machines is supporting customer development, while more production applications are being prepared.

Investors will be looking for ASML to provide updates on the following areas: the number of High-NA machines shipped and recognized as revenue; adoption timelines for TSMC, Intel, and Samsung; manufacturing yields and customer qualification progress; High-NA capacity for 2027 and 2028; and the impact of a more expensive product mix on gross margins.

If adoption of High-NA EUV accelerates, it would support ASML’s valuation by increasing revenue per unit and strengthening its technology leadership. Conversely, any delay in progress would raise market concerns that customers may continue to use traditional EUV tools with multi-patterning techniques longer than previously expected.

ASML Expands Capacity to Meet AI Demand

ASML currently expects to have Low-NA EUV capacity for about 65 units in 2026. The company plans to increase this capacity by around 30% in 2027, and is researching a further 30% increase by 2028. It has also announced similar expansion plans for deep ultraviolet immersion (DUV) systems, with related capacity expected to increase from about 130 units in 2026. Management said ASML is now close to securing all orders needed to fill its 2027 EUV capacity, and has already accumulated a substantial amount of customer commitments for 2028.

This order visibility is at the core of the bullish thesis. ASML does not only benefit from quarterly chip demand, but also profits when manufacturers commit years ahead to build new fabs and adopt new process nodes.

However, capacity expansion also brings execution risks. EUV machines include extremely complex components, supplied by a limited number of specialist manufacturers. Zeiss is the exclusive supplier of several key optical systems for ASML, making supplier capacity an important constraint.

Can ASML Shares Continue Their AI Momentum?

As of last Friday’s U.S. market close, ASML’s share price stood at $1,780.34. According to multiple analysts, its average 12-month target price is around $2,085, implying about 17% potential upside, but target prices range from $1,200 to $2,623.

To drive further bullish sentiment towards ASML, the latest third-quarter earnings report may need to meet several criteria simultaneously: revenue near or above the upper end of ASML’s guidance range; gross margin close to or above 57%; strong EUV and High-NA EUV orders; confirmation that 2027 EUV capacity is almost fully booked; raised full-year revenue or profit guidance; and proof that non-China market demand is offsetting the impact of export restrictions to China.

The main downside scenario would be weakening orders, coupled with more cautious management commentary about customers’ 2027 capital spending. If gross margin falls below 55%, or expansion-related costs continue rising, it could also put pressure on the stock price.

ASML’s current valuation is built on the assumption that AI-driven demand will remain strong in the years ahead. Therefore, merely meeting quarterly performance expectations may not be enough. Investors need to see more evidence that current orders are translating into a sustained backlog and that this growth momentum can extend through 2027 and 2028.