According to a report, lithography giant ASML (ASML.US) will release its third-quarter results before the U.S. market opens on Wednesday, October 14. The Dutch semiconductor equipment maker has become one of the biggest beneficiaries of the artificial intelligence (AI) infrastructure boom, as its extreme ultraviolet (EUV) lithography machines are indispensable equipment for TSMC, Samsung and Intel to produce the most advanced semiconductors. As semiconductor manufacturers expand capacity for AI accelerators, high-bandwidth memory and advanced logic chips, ASML's U.S. shares have risen more than 67% so far this year. Therefore, this latest earnings report will allow investors to judge whether demand for the company's advanced lithography systems remains strong enough to justify its AI premium valuation. With the market already holding high expectations for its outstanding growth performance, revenue figures are certainly important, but order intake and guidance for 2027 may have a greater impact on the stock's post-earnings movement. It is worth noting that ASML's third-quarter earnings will be released before the U.S. market opens on Wednesday, the same day as the release of the U.S. September Consumer Price Index (CPI). This combination could lead to significant volatility in ASML's stock price — the earnings results will affect market expectations specific to the company, while the CPI will influence U.S. Treasury yields and tech sector valuations.
Earnings expectations
ASML previously expected third-quarter revenue of between 11 billion and 12 billion euros, with a gross margin of 55%-57%. The market currently expects third-quarter revenue of about 11.66 billion euros, or roughly $13.2 billion, and earnings per share of about $12.47. ASML also expects revenue from Installed Base Management, which includes services and equipment upgrade business, to reach about 2.9 billion euros. This recurring business is very important because its profit margin may be higher than that of new equipment sales, and it will also benefit as more ASML equipment is put into operation at customer factories. Data shows that ASML's second-quarter revenue was 9.33 billion euros, higher than the guidance the company had previously given; net profit reached 2.92 billion euros, with earnings per share of 7.59 euros. Installed Base Management revenue reached 2.76 billion euros, exceeding management's previous forecast and pushing gross margin up to 54%. After announcing second-quarter results, ASML raised its full-year revenue forecast to 43 billion to 45 billion euros. At the same time, the company also raised its full-year gross margin forecast to 54% to 56%. This updated full-year revenue guidance was significantly higher than analysts' expectation of about 39.6 billion euros before the earnings release. Management attributed the upward revision to accelerating investment in advanced logic chip and memory chip capacity. For the third quarter, investors will focus on whether ASML maintains this full-year guidance or raises it again. If the company raises the lower end of its full-year revenue range, it would be especially supportive, because it would mean equipment shipments and service revenue in the fourth quarter will remain strong.
EUV orders may matter more than revenue
Quarterly revenue largely reflects equipment ordered months or even years earlier. By contrast, net orders provide a more forward-looking reflection of demand and may therefore determine whether investors ultimately view this earnings report as strong or disappointing. ASML is the only company in the world capable of commercially producing EUV lithography systems at scale. These machines use extremely short wavelengths of light to etch the complex, intricate patterns required for advanced semiconductors. Among them, low-numerical aperture (Low-NA) EUV systems have become indispensable equipment for advanced logic chips and high-end memory chips. ASML's newer high-numerical aperture (High-NA) EUV platform is designed to support future process nodes in producing smaller, denser and more powerful chips. At present, demand mainly comes from the following areas: TSMC is expanding capacity to produce AI processors for NVIDIA, AMD and custom chip developers. Samsung and SK Hynix are investing in advanced memory chips needed for AI data centers. Intel is introducing High-NA EUV into some advanced manufacturing processes. Cloud computing companies are funding additional foundry capacity for custom AI accelerators. Chipmakers are upgrading existing equipment to improve productivity and yields. ASML said in July that its customers' commitments across the entire product portfolio are strengthening, and that order intake in the first half of 2026 has been unusually strong. If EUV orders increase in the third quarter, it will further reinforce the view that AI infrastructure investment is translating into long-term equipment demand, rather than merely a temporary surge in orders. It is worth noting that weaker order data does not necessarily mean demand is collapsing, because orders can fluctuate significantly from quarter to quarter. However, if customer commentary becomes more cautious or 2027 capacity plans are delayed, it would trigger more substantial concerns.
High-NA EUV is getting closer to commercial production
High-NA EUV is one of the most important components of ASML's long-term growth story. The new-generation equipment can provide higher resolution than existing EUV platforms and is expected to reduce the number of production steps needed to make advanced chips. Each machine can cost up to $400 million, so High-NA adoption is very important for both ASML's revenue growth and average selling prices. In the second quarter, ASML reached an important milestone: Intel completed certification of High-NA EUV for some Intel 18A product layers. The company said its existing equipment fleet is supporting customer development, while more production applications are being prepared. Investors will want updates from ASML on the following: the number of High-NA machines shipped and recognized as revenue; adoption timelines for TSMC, Intel and Samsung; manufacturing yield and customer certification progress; High-NA capacity for 2027 and 2028; and the impact of a more expensive product mix on gross margin. If High-NA EUV adoption accelerates, it will support its valuation by increasing revenue per machine and strengthening ASML's technological leadership. Conversely, if progress is delayed, it will raise market concerns that customers may use traditional EUV equipment through multi-patterning for longer than expected.
ASML expands capacity to meet AI demand
ASML currently expects Low-NA EUV capacity of about 65 units in 2026. The company plans to expand that capacity by about 30% in 2027 and is studying another 30% increase in 2028. The company has also announced similar expansion plans for deep ultraviolet immersion (DUV) systems, with related capacity expected to increase starting from about 130 units in 2026. Management said ASML is now close to obtaining all the orders needed to fill its 2027 EUV capacity and has already accumulated substantial customer commitments for 2028. This order visibility is central to the bullish case. ASML benefits not merely from quarterly chip demand, but from the fact that manufacturers commit years in advance to building new factories and adopting new manufacturing nodes. However, capacity expansion also brings execution risk. EUV equipment contains extremely complex components, and these components are supplied by a limited number of specialized manufacturers. Zeiss is the exclusive supplier of several key optical systems for ASML, making supplier capacity an important constraint.
Can ASML's stock price extend its AI-driven rally?
As of last Friday's U.S. market close, ASML's stock price was $1,780.34. Based on forecasts from multiple analysts, its average 12-month target price is about $2,085, implying potential upside of about 17%, but target prices range from $1,200 to $2,623. To boost bullish sentiment toward ASML, the latest third-quarter earnings report may need to meet several conditions at the same time: revenue close to or above the upper end of ASML's guidance range; gross margin close to or above 57%; strong EUV and High-NA EUV orders; confirmation that 2027 EUV capacity is almost fully booked; an upward revision to full-year revenue or margin guidance; and evidence that non-China market demand is offsetting the impact of export restrictions to China. The main downside scenario would be weakening orders, along with management becoming more cautious in its comments on customer capital expenditure for 2027. If gross margin falls below 55%, or if expansion-related costs continue to rise, it could also put pressure on the stock price. ASML's current valuation is built on the assumption that AI demand will remain strong for years to come. Therefore, merely meeting quarterly performance expectations may not be enough. Investors need more evidence that current orders are translating into a sustained backlog and that this growth momentum extends into 2027 and 2028.
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