Key points
- ASML posted its biggest quarter yet
- Money tied to future deliveries piles up
- ASML bought back far more stock
ASML Holding (ASML) posted record quarterly sales of €11.7 billion on Wednesday and said its planned production still won't fully meet customer demand in 2027 or 2028. The Dutch chip-equipment maker is now considering a bigger capacity expansion for 2028, according to its third-quarter results.
Customers are raising their equipment forecasts as they plan for larger and longer-lasting AI investments, CEO Christophe Fouquet said. Some are already expressing interest in orders for 2029 and 2030.
"We now expect that our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers," Fouquet said.
In July, ASML planned to increase capacity for two machine lines by 30% in 2027 and was studying another 30% expansion for 2028. It is now looking at going beyond that second increase, though it hasn't given a new target.
How big was the quarter?
Sales were up 55% from €7.5 billion a year earlier. That's near the top of the €11 billion to €12 billion ASML had forecast in July. Service and upgrade work on machines customers already own brought in €3.3 billion of the total. Those upgrades help existing machines turn out more chips, and Fouquet said strong demand for them pushed that business above ASML's forecast.
That upgrade work also lifted ASML's gross margin to 57.5%, which means the company kept 57.5 cents of every euro of sales after the cost of making its products. The gross margin was 51.6% a year earlier, and ASML had forecast 55% to 57%.
Net income was €5.0 billion, more than double the €2.1 billion of a year earlier. That figure includes a €509.7 million gain on stakes ASML holds in other companies, counted before taxes. ASML didn't report a gain like that in any of the four quarters before, and the statements don't say which stake it came from.
ASML expects even bigger sales in the last three months of the year, between €14.2 billion and €15.2 billion. That would be 46% to 56% more than it sold in the same months of 2025. For the full year, ASML now expects €44 billion to €45 billion, after forecasting €43 billion to €45 billion in July. Its 2025 sales added up to about €32.7 billion, so that's growth of 35% to 38%.
ASML sold 121 chipmaking machines in the quarter, 113 new and 8 used, up from 91 in the second quarter. The July expansion plan started from what ASML can build in 2026: around 65 of its standard extreme ultraviolet machines, which print the tiniest features on advanced chips, and around 130 of one kind of its older deep ultraviolet machines.
What happened to the cash?
Cash coming in from ASML's day-to-day business was €11.8 billion in the quarter, compared with €559 million a year earlier. Long-term contract liabilities rose to €9.3 billion on September 27, from €3.4 billion at the end of 2025. These are amounts customers have paid or been billed for products and services ASML has yet to deliver. They do not necessarily represent cash already received. The release doesn't identify the orders or customers behind the increase.
ASML also spent about €4.1 billion buying back about 2.8 million of its own shares, up from about €1.1 billion in the second quarter. Shareholders will get a dividend of €1.88 a share on November 4.
ASML's US shares were down 0.3% at $1,712.68 in early trading on Wednesday, as of 9:37 a.m. Eastern, after trading 2.8% lower before the market opened. Applied Materials (AMAT), Lam Research (LRCX), and KLA (KLAC), which also make chip equipment, were down 1.4% to 3.0%.
We covered ASML's July report, when the stock barely moved after ASML raised its forecast, and how ASML compares with other chip equipment makers in our semiconductor equipment stocks guide. Taiwan Semiconductor Manufacturing Co. (TSM), which uses ASML's machines to make chips, reports on Thursday morning and is on our earnings calendar. ASML plans to share a longer-term outlook at an investor event on June 10, 2027.
Figures are from ASML's October 14 filing. Year-over-year changes and the 2025 total are our arithmetic from ASML's quarterly statements. Share prices are as of 9:37 a.m. Eastern on October 14, and the pre-open figure as of 9:25 a.m.
