ASML, the Dutch semiconductor equipment behemoth, attempted to assuage concerns surrounding its 2026 growth trajectory on Wednesday, cautioning investors about a projected “significant” decline in sales originating from China.
The company clarified that it anticipates total net sales for 2026 to at least match or exceed those of 2025. However, it explicitly stated that customer demand and subsequent sales within China are expected to fall significantly next year compared to the levels achieved in 2024 and 2025. The news comes as global chipmakers are navigating increasing geopolitical tensions, particularly between the US and China, which are impacting supply chains and market growth.
This forward-looking guidance was crucial for ASML, particularly after a share price dip in July fueled by uncertainty regarding the company’s ability to sustain growth into 2026. Macroeconomic headwinds and escalating geopolitical tensions have cast a long shadow over the semiconductor industry, making it crucial for companies like ASML to provide clarity and reassurance to investors.
ASML’s third-quarter performance stacked up as follows against LSEG consensus estimates:
* Net sales: €7.516 billion versus an expected €7.79 billion.
* Net profit: €2.125 billion versus an expected €2.11 billion.
While net sales fell short of analyst expectations, the slight beat on net profit suggests effective cost management and operational efficiency amidst challenging market conditions.
ASML, which recently ascended to become Europe’s most valuable listed company, finds itself at the epicenter of escalating trade tensions. The company has faced headwinds from both domestic export restrictions imposed by the Dutch government under pressure from the United States, and the broader U.S. tariff policies that are reshaping the global semiconductor landscape. These restrictions, in particular concerning advanced lithography systems critical for manufacturing cutting-edge chips, have a direct impact on ASML’s ability to operate freely in key markets like China.
Despite these challenges, several analysts have maintained a bullish outlook on ASML. Morgan Stanley, UBS, and Jefferies recently upgraded the stock, citing favorable tailwinds from the expansion of AI chip foundries and burgeoning semiconductor manufacturing within China. The analysts argue that the increasing demand for advanced chips to power AI applications, alongside China’s drive for self-sufficiency in chip production, will continue to fuel ASML’s growth in the long term. Furthermore, UBS highlighted stronger-than-anticipated smartphone and PC sales, along with AI-driven memory growth, as positive indicators for the semiconductor equipment sector.
Moreover, ASML stands to benefit from anticipated increases in semiconductor equipment demand catalyzed by deals in the AI sector. The company’s unique positioning as the dominant purveyor of extreme ultraviolet (EUV) lithography systems, essential for manufacturing the most advanced chips, makes it a crucial enabler of technological progress in AI and other high-growth areas.
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