ASML's Record Quarter Highlights AI Demand and a Shifting Global Map

The Dutch semiconductor equipment giant ASML delivered a powerful start to the year, fueled by the global race to build artificial intelligence infrastructure. First-quarter revenue hit €8.8 billion, with net profit climbing to €2.8 billion, translating to earnings of €7.15 per share and surpassing analyst expectations. The company's gross margin reached a robust 53%, exceeding its own guidance.

Despite these formidable results, the market reaction was muted, with shares declining around six percent. This disconnect stems from a sharp contraction in a key market and a cautious near-term outlook that overshadowed the strong financials.

A significant regional shift is underway. Revenue from China plummeted to just 19% of the total in Q1, a stark drop from 36% at the end of 2025. This decline is attributed to ongoing discussions around export controls and the potential impact of the bipartisan U.S. MATCH Act, which could further restrict sales of advanced chipmaking equipment to Chinese customers. Some proposals even aim to ban sales of older deep ultraviolet (DUV) lithography systems entirely.

The primary engine of growth is now clearly elsewhere. ASML's most advanced extreme ultraviolet (EUV) machines, essential for producing cutting-edge chips, drove the performance. These systems accounted for nearly two-thirds of all system sales in the quarter, up from less than half in the prior period. This demand is backed by massive, long-term commitments from Asian memory chip giants.

Should investors sell immediately? Or is it worth buying Asml?

South Korea's SK Hynix placed a record order for EUV tools valued at close to €8 billion, with deliveries stretching into 2027. Rival Samsung secured a similarly substantial package just last Friday. Bolstered by these deals, ASML's management raised its full-year 2026 revenue guidance to a range of €36 billion to €40 billion, increasing the previous top-end forecast by €1 billion.

For the current second quarter, the company anticipates revenue up to €9.0 billion, with a midpoint of €8.7 billion that fell slightly short of some analyst projections. Notably, ASML did not publish specific order intake figures for the first time, and its 2027 plan to ship 80 low-NA EUV systems was viewed by Barclays analysts as a slight disappointment against higher expectations.

Shareholders are benefiting directly from the operational strength. The total annual dividend for the past cycle was raised by 17% to €7.50 per share, supported by a multi-billion-euro share buyback program executed in the first quarter. Analyst sentiment remains positive, with Berenberg reiterating a buy rating and a €1,570 price target.

Asml at a turning point? This analysis reveals what investors need to know now.

The recent share price weakness has compressed ASML's valuation significantly. Its historical premium over U.S. peers has evaporated to a decade low. The stock now trades at only a 17% premium to Applied Materials and at a slight discount to Lam Research.

Looking beyond immediate geopolitical and quarterly fluctuations, the long-term trajectory appears intact. The company has held firm on its ambitious targets, aiming for annual revenue of up to €60 billion by the end of the decade. The next milestone for investors is the ex-dividend date, set for late April.

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