ASML posts record quarter and says AI chip demand will outrun its planned capacity in 2027 and 2028

ASML said on Wednesday that demand for its chipmaking machines is now running ahead of the factories it plans to build, as the Dutch company posted record quarterly sales, more than doubled its profit and lifted the floor of its 2026 forecast on the back of AI-driven spending.

A record quarter, lifted by upgrades

ASML reported third-quarter net sales of €11.7 billion on Wednesday, Oct. 14, a record for the Dutch maker of chipmaking machines and 55% more than the €7.5 billion it booked a year earlier. Sales landed toward the top of the €11 billion to €12 billion range the company had guided in July, though a touch below the €11.72 billion analysts polled by LSEG had expected.

Profit grew much faster than revenue. Net income rose to €4.96 billion from €2.12 billion a year earlier, well ahead of the roughly €4.1 billion consensus. Gross margin reached 57.5%, above the 55% to 57% guidance and up from 51.6% a year ago. Not all of that came from selling machines: the quarter included a €510 million gain on equity investments, a line that was empty a year earlier, according to ASML's financial statements. Operating income, which sits above that gain, still more than doubled to €5.17 billion.

Chief executive Christophe Fouquet credited the margin to the installed-base business, the service work and field upgrades ASML sells for machines already running in customers' fabs. Those sales came in above guidance at €3.3 billion "as a result of the continued strong demand for productivity upgrades," he said. ASML sold 113 new lithography systems and eight used ones in the quarter, up from 86 and five in the second quarter.

A higher floor for 2026

For the fourth quarter, ASML guided net sales of €14.2 billion to €15.2 billion with a gross margin of around 57%. Even the bottom of that range would beat the record just set by a wide margin, and it sits above the €14.19 billion analysts had pencilled in, Reuters reported, citing LSEG.

The company now expects 2026 sales of €44 billion to €45 billion with a gross margin of around 56%. In July it had forecast €43 billion to €45 billion and a margin of 54% to 56%, so Wednesday's update lifts the floor of both ranges rather than the ceiling. Through the first nine months, ASML has booked €29.8 billion in sales.

Cash returns are rising with earnings. ASML bought back about €4.1 billion of its own shares in the third quarter under its 2026–2028 program, up from about €1.1 billion in the second quarter, and will pay an interim dividend of €1.88 per share on Nov. 4.

Demand that planned factories cannot meet

The forward-looking language may matter more to investors than the quarter itself. "Our customers continue to increase their short- and medium-term equipment demand forecasts with us, driven primarily by their views on the size and duration of AI-related investments," Fouquet said in the results release. Some customers, he added, are expressing interest in placing orders for 2029 and even 2030.

In July, ASML said it planned to raise capacity for its low-NA EUV machines, from around 65 this year, and for its DUV immersion tools, from around 130, by 30% in 2027, and was studying a further 30% increase for 2028. On Wednesday it said supply as currently planned for both years "will not fully meet the demand of our customers," and that it is investigating ways to push 2028 capacity beyond that second 30% step.

New buildings will not close that gap quickly. ASML broke ground last month on a major expansion in Eindhoven, Reuters reported, but the first phase is not due to be completed until 2029. In the meantime, chief financial officer Roger Dassen said in a company Q&A that ASML will lean on upgrades to installed tools and higher-throughput versions of new machines, which together would provide "a significant enhancement to our customers' capacity."

A read on how long the AI build-out runs

ASML is the only company that makes extreme ultraviolet lithography machines, the tools chipmakers such as TSMC need to print the most advanced processors. That makes its order commentary one of the earliest signals of how far ahead chipmakers are planning for AI demand. During the quarter, Samsung and TSMC both committed to using ASML's next-generation High NA EUV machines.

Marc Hesselink, an analyst at ING, said the results beat expectations and that he expects consensus earnings forecasts to be revised upward through 2028. "Management's commentary on demand visibility and capacity … was again very constructive," he said.

China remains the main limit on the story. ASML is barred from selling EUV and some DUV tools there, and it still expects China to account for about 20% of its business, unchanged from its earlier forecast, CNBC reported. ASML shares were around 2% higher in early European trading after the release, having already risen 56% this year. Fouquet and Dassen host an investor call at 9 a.m. ET.