KEY POINTS
- ASML posted Q1 2026 net sales of €8.8 billion with a 53% gross margin at the high end of guidance, then raised full-year revenue targets to €36-40 billion from €34-39 billion.
- CEO Christophe Fouquet said chip demand is outpacing supply as customers raise short- and medium-term orders for EUV lithography systems critical to AI accelerator production.
- Traders should watch TSMC's earnings call on April 16 for confirmation that downstream fab utilization supports ASML's upgraded outlook.
ASML delivered €8.8 billion in first-quarter net sales on Wednesday, landing within its guidance range while posting a 53% gross margin at the top end of expectations and net income representing 31.4% of revenue — translating to earnings per share of €7.15.
The headline number was the guidance raise. Management lifted the full-year 2026 revenue target to a range of €36 billion to €40 billion, up from the previous €34 billion to €39 billion bracket. Gross margin guidance held steady at 51% to 53%. For the second quarter, ASML guided net sales of €8.4 billion to €9.0 billion with margins between 51% and 52%.
Demand Is Outrunning Capacity
CEO Christophe Fouquet framed the quarter in supply-side terms rather than demand-side terms, which tells you everything about where the cycle stands. "Chip demand is outpacing supply," Fouquet said during the earnings release, noting that customers have raised both short- and medium-term demand expectations for ASML's lithography equipment in recent months.
That language matters because ASML sits at the narrowest chokepoint in the entire semiconductor supply chain. Every advanced logic chip — every Nvidia Blackwell die, every AMD MI450 accelerator, every Apple silicon node shrink — requires ASML's extreme ultraviolet lithography machines to print transistor patterns at the 3-nanometer node and below. When ASML says demand exceeds supply, it means the companies spending hundreds of billions on AI infrastructure want more fabrication capacity than the industry can build.
Order bookings continue to remain strong, according to Fouquet, though the company did not break out a specific bookings figure in its initial release. Analysts had been watching for any sign of order softness after ASML's blockbuster Q4 2025 bookings of €7.1 billion sparked debate about whether the AI infrastructure build-out was peaking. The guidance raise effectively answers that debate: it is not peaking.
The Broader Chip Supercycle
ASML's results land in a semiconductor environment that looks increasingly disconnected from the broader equity market. The PHLX Semiconductor Sector Index has jumped 25% year to date, even as the Nasdaq Composite sits down roughly 1.5% for 2026. That divergence reflects the concentration of capital spending in AI — Deloitte now estimates the AI chip market alone will reach $500 billion this year, and the semiconductor industry as a whole is tracking toward $1 trillion in annual sales for the first time.
The spending is real and visible. TSMC disclosed a record capital expenditure plan of $52 billion to $56 billion for 2026 during its January call. Samsung is ramping HBM production to meet surging memory demand from AI accelerators. Intel is spending aggressively on its foundry comeback. All of those plans funnel orders back to ASML, which remains the sole supplier of EUV systems globally.
Broadcom offered another data point last quarter when it guided for second-quarter fiscal 2026 AI revenues of $10.7 billion, up 140% year over year. That kind of growth rate from a diversified chip company underscores how much of the semiconductor industry's momentum is concentrated in AI-related demand.
What Traders Should Watch Next
The immediate catalyst is TSMC's Q1 2026 earnings call on Thursday, April 16. TSMC already reported consolidated Q1 revenue of NT$1.13 trillion — roughly $35.7 billion, up 35% year over year — but the earnings call will reveal gross margin detail, Q2 guidance, any changes to the full-year capex plan, and management's read on AI demand sustainability. If TSMC confirms that utilization rates remain at or near capacity, it validates ASML's upgraded outlook and keeps the semiconductor trade intact. If TSMC signals any softening in advanced node demand, the entire AI hardware complex reprices lower.
Beyond Thursday, the next major data point for ASML investors is the company's Q2 bookings figure, which will be reported alongside second-quarter earnings in July. A bookings number above €6 billion would confirm the cycle has legs into 2027. Anything below €5 billion would raise questions about whether the guidance raise was premature.
For now, the message from Veldhoven is clear: the AI infrastructure build-out is accelerating, not decelerating, and the company that makes the machines that make the chips is raising its targets accordingly.
