Chip Demand Outstrips Supply, ASML Q1 Results Beat Expectations, Raising Full-Year Guidance Signals Growth Confidence

TradingKey - Global lithography leader ASML ( ASML) reported first-quarter 2026 results on April 15, with core metrics exceeding market expectations across the board and an upward revision to its full-year sales guidance, though its second-quarter outlook fell slightly short of market consensus.

Q1 core performance beat expectations.

ASML's three core operating indicators all exceeded market expectations and fell within the upper end of the company's previous guidance range, achieving net sales of €8.77 billion, higher than the market expectation of €8.69 billion; net profit was €2.76 billion, exceeding the expected €2.56 billion; and the gross margin reached 53%, outperforming the market expectation of 52.2%.

However, the company's cash and other assets in the first quarter were €8.38 billion, significantly lower than the €12.93 billion expected by analysts, a figure that has sparked market attention regarding its cash flow situation.

From the perspective of business structure, net system sales in the first quarter were €6.3 billion, and Installed Base Management (including services and field upgrades) sales were approximately €2.5 billion. The latter accounted for nearly 28.5% of total revenue, highlighting the stable recurring revenue characteristics brought by ASML's massive installed base.

During the quarter, the company delivered a total of 79 lithography systems, which, although lower than the 102 units in the fourth quarter of 2025, was basically in line with the average level of the previous three quarters.

On the product front, ASML recently released the NXE:3800E PEP1-E model, which increases wafer throughput from 220 to 230 wafers per hour while maintaining similar overlay accuracy performance, further enhancing the unit capacity economics for customers.

ASML updated its performance guidance in its earnings report. Regarding full-year guidance, the company raised its 2026 net sales range to between €36 billion and €40 billion, up from the previous range of €34 billion to €39 billion, while full-year gross margin expectations were maintained between 51% and 53%.

Meanwhile, net sales for the second quarter are expected to be between €8.4 billion and €9.0 billion, with a midpoint of approximately €8.7 billion, lower than the Bloomberg consensus estimate of €9.07 billion; the gross margin forecast range is 51% to 52%, slightly lower than the actual level in the first quarter.

AI-driven orders surge

ASML's earnings growth is primarily benefiting from the ongoing boom in AI infrastructure investment. Currently, tech giants such as Microsoft ( MSFT ), Alphabet ( GOOGL) ( GOOG) and other tech giants, as well as AI startups like OpenAI, plan to invest trillions of dollars in AI infrastructure. This trend is being transmitted upward along the supply chain, directly driving chip foundries and memory chip makers to increase capital expenditures.

TSMC ( TSM) announced in January that its annual capital expenditure could reach as high as $56 billion; meanwhile, SK Hynix signed an agreement with ASML, planning to purchase approximately $8 billion in advanced equipment by 2027.

As the world's only manufacturer capable of producing the critical equipment required for cutting-edge semiconductors, ASML is regarded by the industry as a "bellwether" for chip demand trends.

Its core customer, TSMC, disclosed record first-quarter revenue last week, which validates the strong resilience of AI chip demand. Concurrently, the continuous price increases caused by memory chip shortages are pushing manufacturers like Samsung and SK Hynix to accelerate capacity expansion, further boosting demand for ASML's equipment.

ASML CEO Christophe Fouquet stated in an earnings statement: "Chip demand is outpacing supply. To this end, supported by long-term agreements signed with customers, our clients are accelerating their capacity expansion plans for 2026 and beyond." He noted that in recent months, customers have raised their short- and medium-term demand expectations for the company's products. "ASML's order bookings continue to remain strong," he said.

Meanwhile, ASML warned in its earnings report that the uncertainty of export controls has been factored into its 2026 forecasts.

The recent draft of the MATCH Act, proposed by a bipartisan group of U.S. lawmakers, further restricts the export of chipmaking equipment to mainland China—including immersion DUV lithography systems—and could even block equipment maintenance services. Mainland China contributed 33% of ASML's global sales in 2025. The company previously projected this ratio would drop to 20% in 2026, and the actual proportion in the first quarter has already fallen to 19%. If the relevant controls are ultimately implemented, it could deal a further blow to the company's performance.