When a company beats earnings on every metric, raises full-year guidance again, and still dips before the open, the market is telling you something. With ASML, what it is telling you is wrong.
Revenue for the September quarter rose about 55% year over year to €11.66 billion, and gross margin reached 57.5%, clearing the top of management’s own 55% to 57% forecast range. Net income increased to €4.96 billion from €2.92 billion in Q2. New lithography systems sold increased to 113 units from 86 in Q2. Basic EPS of €12.95 topped consensus estimates, by roughly 20% based on widely published estimates.
The guidance raise is where this gets interesting. Q4 revenue is guided to €14.2 to €15.2 billion, and the full-year 2026 outlook now sits at €44 to €45 billion with gross margin around 56%. This is the third upward revision to annual guidance this year, a cadence that reflects not opportunistic optimism but a customer base that keeps ordering faster than the company can produce.
The installed base business is the detail most investors skimmed past. Installed base revenue was €3.289 billion, roughly €400 million above the company’s prior target, reflecting intense customer appetite for upgrades to expand capacity within existing fabs. Chipmakers who cannot get a new EUV machine fast enough are spending aggressively to squeeze more output from the tools they already own. That is not a sign of weak demand. That is a queue forming.
CEO Christophe Fouquet said demand remains unusually strong: “All of them are commenting that they see their demand increasing on the short term, but also extending in time. Today, they expect that their supply will not meet the demand at least until 2028.”
Then came the admission that spooked the market. Fouquet said ASML will need to expand capacity faster than planned: “30% in 2027, 30% in 2028 will not allow us to meet our customer demand. We have to do more.” He also said discussions with customers are shifting beyond 2027, including interest in ordering for later years.
Investors sold the stock because ASML said it cannot satisfy demand for two years. That is a peculiar reason to reduce exposure to the world’s only supplier of extreme ultraviolet lithography machines, the equipment without which TSMC, Samsung, and Intel cannot manufacture leading-edge chips at all. ASML’s unique market position as the sole supplier of EUV lithography systems critical for advanced chip manufacturing means its backlog problem is not a weakness. It is a structural moat measured in years of committed revenue.
If ASML’s EUV capacity is the bottleneck for the whole advanced-chip buildout, the ripple runs through the entire equipment complex, pulling through demand for deposition, etch, and process tools that Applied Materials and peers supply. The ASML earnings call is a leading indicator for semiconductor capital spending broadly, not just one company’s quarter.
The risks are real. Management has said it expects China to account for around 20% of 2026 sales, and export controls, tariffs, and geopolitical pressure continue to weigh on sentiment. A sharp deceleration in AI capital spending would show up in ASML’s order trends before it reached revenue. Valuation is also a legitimate debate, but simple heuristics vary widely by source and can swing with exchange rates, estimates, and the timing of the cycle.
But none of that changes what this morning’s numbers showed: a company running ahead of its own forecasts every quarter, with customers begging for machines that will not exist for two years. The selloff is a gift to investors who understand what they are actually buying.
Watch for: any updated capacity numbers ASML provides for 2028 beyond the existing 30% target, High NA EUV adoption timelines at TSMC and Samsung, and whether Q4 installed base revenue continues to run above guidance as chipmakers keep upgrading rather than waiting.
