ASML warns of sharp China drop as U.S. ramps pressure

ASML reported €5.4 billion ($6.2 billion) in new orders for the third quarter on Wednesday, riding the AI boom straight into 2026 with its fists up.

The Dutch semiconductor equipment firm told markets it now believes next year’s revenue won’t fall below 2025 levels, reversing its July stance that had caused panic among investors. Shares jumped 3% on the day and are now up 24% year-to-date.

Back in July, ASML’s stock dropped after the company warned it couldn’t commit to 2026 growth due to what it called “macro and geopolitical uncertainty.”

This week, it finally decided to talk straight. While it didn’t give a full forecast, ASML said it will lay out more details in January, and at least for now, 2026 isn’t looking worse than 2025.

ASML warns of sharp China drop as U.S. ramps pressure

CEO Christophe Fouquet said ASML expects a “significant” decline in Chinese customer sales next year. This is a warning shot. He also said in a video transcript that while AI is pushing new momentum into the business, China won’t carry the weight it once did:

“We expect customer demand and sales in China to decline significantly next year compared to 2024 and 2025.”

This is happening while U.S. lawmakers continue threatening even tighter export controls on chip gear, and Donald Trump keeps throwing tariff threats back into the mix. Ben Barringer, global tech analyst at Quilter Cheviot, told CNBC’s Europe Early Edition that,

“The news on China is a little concerning… the U.S. select committee is potentially considering more restrictions.”

Despite that, Barringer said the Q3 bookings figure was stable enough to calm markets.

“The bookings number has been quite volatile over this year, so a little bit of stability is, I think, quite good,” he said, adding that investors are starting to look beyond 2026 and focus more on 2027.

ASML’s biggest client, TSMC, is expected to report its earnings on Thursday. Everyone’s watching closely, especially since demand for AI-related compute infrastructure still hasn’t slowed. More strain in computing capacity could feed straight back into ASML’s lithography business.

ASML hits 7.5 billion euros in sales, eyes 9.8 billion for Q4

ASML reported €7.516 billion in net sales for Q3, just shy of LSEG’s €7.79 billion forecast, and net profit of €2.125 billion, slightly above expectations. Looking ahead, it forecast Q4 sales between €9.2 billion and €9.8 billion, and a gross margin between 51% and 53%.

For full-year 2025, it’s holding on to its previous call; revenue up about 15% compared to 2024, with a gross margin hovering around 52%.

The firm also reminded analysts it’s still Europe’s most valuable listed company, and it’s not backing off AI anytime soon.

“Strong news about commitment to AI has helped reduce some of the ongoing uncertainties,” Fouquet said.

“We also see that AI could create a lot of value in our products moving forward.”

ASML’s Chief Financial Officer Roger Dassen added that their new partnership with French AI company Mistral is part of a wider plan to go deeper into the AI space:

“This is a way for us to get closer and closer to the AI world.”

On Wall Street, Morgan Stanley, UBS, and Jefferies have all upgraded their ASML outlook. Morgan Stanley pointed to more AI foundry expansions, and UBS said stronger PC and phone sales, plus AI-driven memory demand, were creating upside. Meanwhile, Nvidia and Intel’s $5 billion supply deal is expected to drive more demand for ASML’s gear.

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