ASML Q2 Earnings Disappoint, But Still Looks Set for Growth in 2026

ASML Holding reported Q2 CY25 earnings, disappointing markets with a lower forward-looking outlook. Despite this, the company's management signaled growth for the year. ASML is the world's most advanced maker of semiconductor equipment and tools. The company's performance and outlook have been impacted by the ongoing semiconductor industry challenges.

Title: ASML Holding N.V. Reports Q2 CY25 Earnings, Cautious Outlook for 2026

July 2, 2025

ASML Holding N.V. (NASDAQ: ASML), the world's leading manufacturer of semiconductor equipment and tools, recently reported its second-quarter (Q2) 2025 earnings, which disappointed markets with a lower forward-looking outlook. Despite this, the company's management signaled growth for the year. ASML's performance and outlook have been significantly impacted by ongoing challenges in the semiconductor industry.

Earnings Highlights

ASML reported Q2 earnings of €5.90 per share, a 47.1% increase year over year. In USD, this equated to $6.7 per share, surpassing the Zacks Consensus Estimates by 12.8% [2]. Total net sales for the quarter were €7.69 billion, up 23.2% year over year, or $8.7 billion in USD, which exceeded the Zacks Consensus Estimate by 1.8% [2].

Segment-wise, ASML's Systems segment contributed 72.8% to its top line, with net sales of €5.596 billion, reflecting a 17.5% growth from the year-ago quarter. The Services and Field segment's net sales were €2.095 billion, up 41.4% year over year [2].

Financial Performance

ASML's gross margin was 53.68%, expanding 223 basis points (bps) from the year-ago quarter. Operating expenses were €1.47 billion, up 6.4% year over year. The non-GAAP operating margin of 34.64% expanded 525 bps year over year [2].

Balance Sheet and Cash Flow

As of June 29, 2025, ASML's cash, cash equivalents, and short-term investments stood at €7.25 billion, down from €9.1 billion as of March 30, 2025. Inventories were €11.58 billion in the second quarter compared to €11.02 billion in the first quarter of 2025. Accounts receivables increased to €4.996 billion from €4.59 billion in the previous quarter. Long-term debt was €3.698 billion, changing marginally from the previous quarter. ASML posted a net negative cash flow of €1.854 billion [2].

Guidance and Outlook

For the third quarter of 2025, ASML expects total net sales between €7.4 billion and €7.9 billion (USD $8.6 billion to $9.2 billion). The company anticipates a gross margin between 50% and 52% and projects research and development costs around €1.2 billion, with selling, general, and administrative expenses expected to be approximately €310 million [2].

For full-year 2025, ASML expects total net sales to grow by approximately 15% year over year, with a gross margin of around 52% [2].

Impact of Geopolitical Uncertainty

CEO Christophe Fouquet and CFO Roger Dassen expressed caution about the company's growth prospects for 2026, citing geopolitical uncertainty and trade tensions. The company's lead times of 12-18 months mean orders reflect confidence in global chip demand through 2026. If this confidence wavers, it could have significant implications for the entire innovation economy [3].

Analysts' Response

DZ Bank downgraded ASML to a Hold rating from Buy, with a new price target of EUR 655, reflecting reduced expectations for revenue growth due to a decline in demand for semiconductor manufacturing equipment [4].

Conclusion

While ASML's Q2 earnings were strong, the company's cautious outlook for 2026 highlights the challenges posed by geopolitical uncertainty and trade tensions. Investors will be closely monitoring ASML's performance and how it navigates these challenges in the coming years.

References:

[1] https://www.ainvest.com/news/asml-uncertain-future-implications-tech-industry-2507/
[2] https://www.nasdaq.com/articles/asml-holding-q2-earnings-and-revenues-surpass-expectations
[3] https://www.ainvest.com/news/dz-bank-downgrades-asml-hold-buy-eur-655-price-target-2507/
[4] https://seekingalpha.com/article/4803340-asml-the-case-for-2026-growth-upgrade