Q225 Beats, Weak 2026 Outlook Drops ASML
Just now, $ASML Holding NV(ASML)$ released its Q2 report. The results were good — both revenue and profit exceeded analysts’ expectations:”
Data from bloomberg, data as of July 15th 2025
However, due to uncertainties brought by the macroeconomic environment and geopolitical factors, management expressed caution about growth next year. In the previous quarter, management had expected both this year and next year to be years of growth.
Comparing the two, it’s clear that management’s confidence for next year has declined!
As a result, $ASML Holding NV(ASML)$ ’s stock plunged nearly 8% in pre-market trading:
Premarket of July 16th 2025
Specifically, ASML’s Q2 revenue was €7.69 billion, a year-over-year increase of 23.2%. This exceeded the management’s guidance upper limit of €7.2–7.7 billion and was higher than the analysts’ forecast of €7.5 billion：
Data from bloomberg, data as of July 15th 2025, by Semi_Dig,
Regarding gross margin, it was 53.7% in Q2, also exceeding management’s guidance upper limit of 50%–53%, and significantly higher than analysts’ expectation of 51.9%：
Data from bloomberg, data as of July 15th 2025by Semi_Dig,
The gross margin exceeded expectations mainly due to growth in upgraded business and cost reductions caused by one-time expenses, both of which are unsustainable.
Regarding order backlog, Q2 amounted to €5.54 billion, a significant increase from €3.9 billion in Q1, and well above analysts’ expectation of €4.8 billion:
Data from bloomberg, data as of July 15th 2025, by Semi_Dig,
However, as management noted, the order backlog has fluctuated greatly in recent years and is difficult to use as an indicator. Looking at recent quarters, it either significantly exceeded or fell far below expectations, showing poor predictability.
Therefore, ASML will no longer disclose this metric next year.
If we look only at Q2 results, ASML’s performance can be considered nearly perfect, with revenue, profits, and orders all beating expectations.
However, ASML expects Q3 revenue to be between €7.4 billion and €7.9 billion. Using the midpoint, this represents only about 2.5% year-over-year growth, falling short of the analysts’ forecast of €8.2 billion.
Although Q3 guidance is below expectations, ASML forecasts total revenue for 2025 to grow about 15% year-over-year. Based on this, Q4 revenue could be around €9.5 billion, well above the analysts’ forecast of €8.9 billion.
Combining Q3 and Q4, second-half revenue is expected to reach about €17.15 billion, slightly above analysts’ expectation of €17.12 billion.
From this perspective, the lower Q3 guidance is not a major issue.
However, previously ASML expected 2025 revenue between €30 billion and €35 billion, with a gross margin between 51% and 53%. According to the current guidance, ASML’s revenue this year will be about €32.6 billion and gross margin about 52%, both near the midpoint of the guidance, without any surprises.
With no surprises this year, ASML also revised its 2026 outlook—from a confident “year of growth” to “uncertain,” clearly cooling enthusiasm among investors.
That said, AI demand remains strong. Nvidia and Broadcom stocks have hit all-time highs, and $Taiwan Semiconductor Manufacturing(TSM)$ ’s capital expenditure this year is significantly higher than last year. Memory manufacturers have started using EUV to produce DRAM, which is more expensive and more profitable than DUV.
Therefore, $ASML Holding NV(ASML)$ will surely benefit from AI, but considering US semiconductor restrictions on China and tariff uncertainties, the cautious tone in ASML’s outlook for next year is understandable.
From a valuation perspective, ASML’s price-to-earnings (P/E) ratio is 29 times, which is relatively low compared to the past 10 years:
Data from bloomberg, data as of July 15th 2025 by Semi_Dig
From this perspective, ASML’s short-term performance will be negatively affected by the lower-than-expected growth in 2026. However, in the medium to long term, if tech giants continue to increase AI-related capital expenditures, with $NVIDIA(NVDA)$ and $Broadcom(AVGO)$ revenues hitting new highs, and chip manufacturers like $Taiwan Semiconductor Manufacturing(TSM)$ , $SAMSUNG ETFS TR.(SGCRF)$ , and $Micron Technology(MU)$ ramping up their investments, ASML will ultimately benefit.
The uncertainty, however, remains volatile due to geopolitical tensions and tariff issues.
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