A quarter above forecasts and growth across the income statement
ASML reported net revenue of €9.326 billion in the second quarter of 2026, representing year-over-year growth of 21% and quarter-over-quarter growth of 6%. Sales of new systems, used equipment, and other technology solutions generated €6.565 billion, while service and upgrades to installed machines brought in €2.762 billion. Gross profit rose to €5.035 billion, and the gross margin increased to 54% from 53.7% a year ago and 53% in the first quarter. Operating profit reached €3.456 billion, up nearly 30% year-over-year, and the operating margin rose from 34.6% to 37.1%. Net income reached €2.918 billion, compared to €2.290 billion a year ago, and basic earnings per share rose from €5.90 to €7.59. The company sold 91 lithography systems during the quarter, compared to 76 systems a year ago, comprising 86 new and five used systems. The largest sales region was South Korea, accounting for 43% of system revenue, followed by Taiwan at 30%, China at 14%, the United States at 9%, and Japan at 4%.
AI demand is expanding into logic, memory, and services
ASML’s growth is no longer driven by a single customer group or a single type of equipment. For advanced logic chips, manufacturers are adding capacity to existing 5-, 4-, and 3-nanometer processes, which power the most powerful processors for data centers and artificial intelligence. At the same time, they are accelerating the rollout of 2-nanometer processes and beginning to prepare for 1.4-nanometer production. ASML therefore expects its revenue from advanced logic chip manufacturing to grow by approximately 25% in 2026. It foresees even faster growth in the memory chip segment. High demand for DDR and HBM memory is creating a need for new capacity and forcing manufacturers to accelerate their investment plans. ASML’s revenue from the memory segment is therefore expected to increase by approximately 75% in 2026. Installed Base Management, which includes service and upgrades of existing equipment, is also becoming a significant driver. This part of the business exceeded management’s expectations by approximately €300 million in the second quarter and is expected to grow by more than 30% for the full year. Customers are primarily taking advantage of software and technology upgrades that boost the productivity of already installed systems without the need for extensive production downtime. [1]
Orders are already determining capacity for 2027 and 2028
ASML did not disclose the exact value of new orders for the second quarter, but stated that demand was very strong throughout the first half of the year. According to management, the company is already close to securing nearly all the orders needed to fully utilize its production capacity in 2027, even though it plans to significantly expand that capacity. In 2026, ASML aims to produce approximately 65 of its most advanced lithography systems, and in 2027, it plans to increase production by about 30% to roughly 85 units. It also plans similar growth for other types of equipment used in chip manufacturing. Production of these is expected to rise from roughly 130 units in 2026 to approximately 170 in 2027. The company is also considering further production expansion for 2028, and is already seeing strong customer demand for that period as well. A new generation of even more powerful machines, which enable the production of smaller and more powerful chips, is also set to play a key role in future growth. ASML is already testing these technologies in collaboration with Intel, and initial results indicate that they are ready for use in mass production. At the same time, the company is in talks with other chip manufacturers about when they will begin using these new machines in their factories. [2]
Higher outlook changes the full-year picture
ASML expects net revenue of €11 to €12 billion in the third quarter of 2026, of which approximately €2.9 billion is expected to come from service and upgrades of installed systems. The gross margin is expected to reach 55 to 57%, with research and development expenses of approximately €1.2 billion and selling, general, and administrative expenses of approximately €400 million. The company has raised its full-year revenue outlook from the original €36 to €40 billion to €43 to €45 billion. The midpoint of the forecast range has thus increased by nearly 16%. It has raised its expected full-year gross margin from the original 51 to 53% to 54 to 56% and expects an effective tax rate of approximately 17%. In the second quarter, the company generated operating cash flow of €1.703 billion. Investments in real estate and production facilities totaled €299 million, and purchases of intangible assets amounted to €87 million; after deducting these items, approximately €1.317 billion remained. At the end of the quarter, the company held cash and short-term investments totaling €7.582 billion. ASML also repurchased approximately 800,000 of its own shares for €1.1 billion and, since the program began, has repurchased approximately 1.7 million shares for €2.1 billion. The entire program allows for buybacks of up to €12 billion through the end of 2028. The first interim dividend for 2026 will be €1.88 per share and will be paid on August 5. China remains a significant risk, as management expects it to account for approximately 20% of full-year revenue. The company may sell less advanced equipment using deep ultraviolet lithography there, but exports of systems using extreme ultraviolet lithography and the most advanced deep ultraviolet lithography technologies remain restricted, and further tightening of regulations could affect future sales. [3]
[1,2,3] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements do not guarantee future results. They involve risks and other uncertainties that are difficult to predict. Actual results may differ materially from those expressed or implied in any forward-looking statements.
Sources:
https://www.asml.com/en/news/press-releases/2026/q2-2026-financial-results
https://www.reuters.com/business/asml-tops-q2-estimates-ai-chip-demand-2026-07-15/
https://www.asml.com/en/investors/financial-results/q2-2026
https://www.asml.com/en/news/press-releases/2026/high-na-euv-reaches-new-readiness-milestone
