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ASML Earnings Are Good Enough to Lift the Stock Despite Sales Miss. Here’s Why.

Oct 14, 2025 10:31:00 -0400 by Adam Clark | #Chips #Earnings Report

ASML’s most advanced machines can cost more than $400 million each. (Emmanuel Dunand/AFP via Getty Images)

Key Points

ASML Holding reported confident guidance for next year, which could help justify investors’ recent enthusiasm for the chip-making equipment company.

The upbeat forecast came amid mixed earnings on Wednesday, as profit beat expectations but revenue came in below forecasts.

ASML reported third-quarter earnings of 5.49 euros a share ($6.38) on revenue of €7.52 billion. Analysts had expected earnings of €5.45 a share on revenue of €7.74 billion, according to a FactSet.

In its previous earnings announcement, ASML said it expected 15% sales growth this year but tariff uncertainty meant it couldn’t guarantee growth in 2026. On Wednesday, the company was marginally more positive as it reiterated its 2025 growth expectations and said it doesn’t expect its 2026 sales to be below this year’s level.

ASML also reported orders worth €5.40 billion, up from €2.63 billion a year earlier. For the current quarter, the company expects sales between €9.2 billion and €9.8 billion.

The Dutch company’s American depositary receipts (ADRs) have been on an impressive run lately, surging more than 30% from their level at the start of September. The ADRs were up 4.3% at $1,025.16 in premarket trading.

ASML should be well-placed to benefit from the boom in demand for advanced chips created by the growth of artificial intelligence. It has a near-monopoly on the specialized lithography machines used to produce the high-performance chips used in AI data centers.

“On the market side, we have seen continued positive momentum around investments in AI, and have also seen this extending to more customers,” ASML CEO Christophe Fouquet said in a statement.

“These are results and outlook commentary which don’t give too much ammunition to either bulls or bears in our view,” wrote Jefferies analyst Janardon Menon in a research note on Wednesday. “But after such a strong rally…we believe these order trends and the lack of confidence in growth in 2026 are insufficient to drive up the stock much further.”

Menon has a Hold rating and €780 target price on ASML’s Amsterdam-listed stock, which was up 3.4% to €875.20 in local trading Wednesday.

ASML’s major issue continues to be a slowdown in spending on its most advanced extreme ultraviolet lithography, or EUV, tools by Samsung Electronics and Intel . That has left the company dependent on investment by Taiwan Semiconductor Manufacturing, which has been reluctant to commit to buying ASML’s latest high numerical aperture, or High NA EUV, machines.

“Although adoption of High NA EUV in production is likely only in late 2027 or early 2028, in our opinion, the countdown to its adoption has started,” J.P. Morgan analyst Sandeep Deshpande wrote in a research note ahead of ASML’s earnings announcement. “We believe that interest in ASML and thus the stock multiple is likely to expand as the company sees more orders for this technology to enable customers to ramp it up into high volume manufacturing.”

Deshpande has an Overweight rating and $1,175 target price on ASML’s ADRs.

Until 2023, ASML sales to China had accounted for less than 20% equipment sales, but in that year 29% shipped to China. This is particularly notable because Chinese customers can’t buy EUVs or other high-end equipment. At the time, ASML explained it as a surge in shipments after a massive backlog built up in 2020 to 2022 due to supply-chain issues.

ASML has long lead times to make deliveries, and that surge bled into 2024, when 41% of equipment sales went to China. A year ago, as ASML offered 2025 guidance, the company said it expected that figure to decline to around 20% in 2025. However, in the third quarter, Chinese shipments were 42% of system sales, bringing the 2025 total to around 32%.

ASML didn’t offer an explanation, and management continued to express surprise at the 2025 results, but also sought to tamp down expectations.

“I think that we have about the same clarity that we had last year about this time,” said Fouquet on the earnings call. “Our expectation and the visibility we have right now is that next year, we will go back to more reasonable business.”

“That’s based on our understanding of the market,” added CFO Roger Dassen. “It’s based on the dialogues that we have with our customers. Could that change? Absolutely.”

Write to Adam Clark at adam.clark@barrons.com