ASML Raises Outlook, Plans Capacity Hike as AI Boosts Demand

ASML Holding raised its 2026 sales guidance to between €43 billion and €45 billion on Wednesday, July 15, 2026, as unrelenting demand for AI-enabling chip manufacturing tools triggered a second annual forecast hike. The company also announced plans to boost production capacity by 30% in both 2027 and 2028. This move is intended to ease fears that a production bottleneck could slow the ongoing artificial-intelligence infrastructure boom.

Record-Setting Demand and Earnings Performance

ASML reported second-quarter 2026 results that surpassed analyst expectations, signaling that the global push for AI infrastructure is effectively insulating the semiconductor equipment giant from market volatility. The company posted total net sales of €9.3 billion and a net income of €2.9 billion for the quarter ended June 30, topping analyst estimates of €8.80 billion and €2.62 billion, respectively. These figures were driven primarily by higher-than-expected revenue from its Installed Base Management segment.

“Our second-quarter total net sales were €9.3 billion and gross margin came in at 54.0%, both above guidance, driven primarily by higher than expected Installed Base Management sales,” said ASML President and Chief Executive Officer Christophe Fouquet in a statement.

Shares of the Amsterdam-listed company, which are up 75% in the year to date, rose 3.7% to €1,613 at 1000 GMT. Degroof Petercam analyst Michael Roeg characterized the results as blow-out results across the board. Similarly, analyst Marc Hesselink noted that “easing lithography constraints is also positive for the broader equipment ecosystem, where ASML has been viewed as a key bottleneck.”

Capacity Expansion Plans Through 2028

To address concerns that its manufacturing output could act as a bottleneck for the broader AI boom, ASML is committing to a significant scale-up of its production capabilities. The company plans to add 30% to its 2026 low NA EUV capacity of around 65 for 2027, and is investigating a further 30% increase for 2028. A similar 30% expansion is planned for its 2026 DUV immersion capacity of around 130 for 2027, with an investigation into an additional 30% increase in 2028. Despite the aggressive expansion, Fouquet noted that nearly all of its expanded EUV capacity through 2027 is already fully booked.

Photo: Reuters

Analysts at JPMorgan stated they believed the results would help ASML close a valuation gap with U.S. peers, noting: “The message from bears has been that they are capacity-limited or that they don’t grow … (but) the company is virtually guiding 30% growth in the next two years.” The expansion is not purely speculative; CFO Roger Dassen confirmed that the company is already accounting for the needs of new customer Terafab, the Texas-based venture Elon Musk is building to supply chips to SpaceX and Tesla.

Market Dynamics and Long-Term Visibility

The company’s upward revision of its 2026 sales forecast—now targeting €43 billion to €45 billion—represents an increase of 16% at the midpoint from its earlier forecast range of €36 billion to €40 billion. ASML supplies critical machinery to companies including TSMC, Samsung, and Intel, all of which are accelerating their own capacity expansion plans. Fouquet noted that this translates into customer commitments across the product portfolio, providing the company with “increased visibility into longer-term demand.”

Technological advancement remains a core focus. Fouquet confirmed that Intel will use ASML’s new High-NA tool to manufacture some of its most advanced “Panther Lake” chips, marking a first for the technology. The company is already planning for its next major strategic update, scheduling a Capital Markets Day for June 10, 2027, to align its long-term outlook with market and technology dynamics.

Global Trade and Regional Outlook

Despite ongoing U.S.-led export restrictions, demand from Chinese customers remains a factor. CFO Dassen reiterated that while Chinese customers will account for about 20% of sales this year—less in percentage terms than in past years—the absolute revenue is increasing as ASML’s total sales rise. Dassen stated that the Chinese market is “moving in sync with the overall behaviour that we see globally,” with strong demand from Chinese makers of logic chips. For the third quarter of 2026, ASML expects total net sales between €11.0 billion and €12.0 billion with a gross margin between 55% and 57%.

Photo: WSJ