ASML 2026 Q1 Earnings Preview: Valuations Are Already at Highs, Can AI Orders Support Growth Expectations?
ASML is set to report Q1 2026 results amidst market scrutiny of its premium valuation and growth prospects. Consensus forecasts Q1 revenue of €8.61 billion, up 11.2% YoY. Management projects full-year 2026 revenue of €34-39 billion and a long-term target of €44-60 billion by 2030. Demand for EUV systems, particularly for AI chip production and Samsung's P5 fab, remains a key focus. Gross margin is expected between 51%-53%, potentially impacted by product mix shifts. Geopolitical risks, including US export controls on China, could significantly affect future revenue and EPS.
TradingKey - Global lithography leader ASML ( ASML) is scheduled to disclose its first-quarter 2026 financial results on April 15, as market focus on the company's short-term performance fluctuations and long-term growth potential continues to climb.
Over the past five trading days, ASML's stock price has risen by a cumulative 7.59%. However, Wall Street generally believes the company's current valuation is at a high level; any deviation in the earnings guidance provided in this report could trigger significant stock price volatility, providing short-term trading opportunities for active traders.
According to the latest FactSet consensus estimates, ASML's first-quarter revenue is expected to reach 8.61 billion euros, up 11.2% year-over-year, with earnings per share projected at 6.57 euros.
Previously, ASML management had issued full-year 2026 guidance, with revenue expected between 34 billion and 39 billion euros, representing a 12% year-over-year increase at the midpoint, while maintaining gross margins between 51% and 53%. The company also proposed long-term growth targets, expecting annual revenue to reach 44 billion to 60 billion euros by 2030.
Samsung P5 Wafer Fab Becomes the Main Highlight
Since ASML has stopped disclosing specific order data starting this quarter, market attention has shifted to management's qualitative descriptions of customer demand.
Notably, demand for AI chips continues to drive investment in advanced processes, with logic customers, led by TSMC, showing strong willingness to purchase EUV systems.
SK Hynix is reportedly spending approximately $8 billion on EUV equipment, and progress on Samsung's order of around 20 EUV units for its P5 fab is viewed by JPMorgan as the "most significant news lead" in this earnings report. Given the current tight supply in the memory market, TSMC is expected to disclose delivery schedules for 2027 and beyond more frequently within 2026, which will further solidify ASML's order visibility.
As a critical next-generation tool, the pace of High-NA EUV order confirmations and shipments will serve as a key signal to validate market confidence; investors will focus on the proportion of EUV in first-quarter system sales, the number of High-NA orders, and updates to the full-year 2026 guidance.
If order performance exceeds expectations, it will bolster market confidence in the company's full-year revenue target of 34-39 billion euros; conversely, it could spark questions regarding the growth trajectory for 2026-2027.
Short-term pressures coexist with long-term growth.
The company provided a gross margin guidance range of 51%-53% for the first quarter of 2026, representing a decline from approximately 54% in the same period last year, primarily due to a shift in product mix toward lower-margin categories and underperformance in the service business.
Despite the semiconductor recovery and strong demand for logic chips, changes in the product mix and a slowdown in the service business may lead to a year-over-year decline in gross margin. The company's gross margin of over 52% is primarily driven by the high unit prices and technical barriers of EUV systems, as well as the stable cash flow contribution from its installed base service business.
New technologies such as High-NA EUV are in the early stages of commercialization, with R&D expenses remaining high (projected at approximately €1.2 billion for the first quarter of 2026). Combined with upward cost pressures, this will place constraints on margin expansion.
However, management maintains its long-term target, planning to increase the gross margin to 57% by 2030.
From an earnings perspective, if the first-quarter gross margin reaches the upper end of the guidance range or if management provides a more positive full-year outlook, it will effectively alleviate market concerns regarding margin pressure; conversely, if gross margin performance falls below expectations, it could further exacerbate valuation correction risks, especially since current share prices already reflect high growth expectations.
Geopolitical risk
The Chinese market remains a critical component of ASML's global footprint; despite escalating export controls, domestic demand for Deep Ultraviolet (DUV) lithography machines continues to show resilience.
Data shows that the Chinese mainland market accounted for 33% of ASML's global sales in 2025, serving as a vital engine for revenue growth. However, ASML stated publicly in January that it expects the revenue contribution from the Chinese market to drop back to 20% by 2026.
In this first-quarter earnings report, investors will focus on revenue contribution data from the China region as well as management's qualitative assessment of regional sales trends for the year. If demand in the Chinese market exceeds expectations, it could partially offset volatility in other regional markets. However, if controls tighten further or demand slows significantly, it could exert direct pressure on the company's overall order volume.
Currently, the proposed U.S. 'MATCH Act' has become a primary risk looming over ASML. According to reports, the bill not only plans to further restrict exports of chip-making equipment—including immersion DUV lithography machines—to the Chinese mainland but also attempts to block equipment suppliers from providing maintenance services for equipment already sold to Chinese manufacturers.
J.P. Morgan analysts estimate that if the 'MATCH Act' is ultimately implemented, ASML's annual earnings per share (EPS) could be slashed by as much as 10%, and the Chinese market's share of business might slide further from the projected 20%.
This content was translated using AI and reviewed for clarity. It is for informational purposes only.
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