ASML Warns on 2026 Growth Despite Solid Q2 Beat, Weighing on Semiconductor Sentiment

ASML, one of the most critical players in the semiconductor supply chain, reported second-quarter results on Wednesday that beat Wall Street estimates across most key metrics—but a cautious outlook for the rest of 2025 and a warning that growth may not materialize in 2026 sent shares tumbling over 6% in early U.S. trading. As the first major chip equipment name to report this cycle, ASML’s earnings are viewed as an early barometer for the broader semiconductor complex, particularly in light of its dominance in extreme ultraviolet (EUV) lithography tools used by giants like TSMC, Intel, and Samsung. The company’s hesitance around forward growth, especially amid escalating tariff uncertainty, comes at a vulnerable time for tech stocks, which were among the few market leaders on Tuesday while the rest of the tape saw broad-based weakness.

For the second quarter, ASML posted net sales of €7.69 billion, topping estimates of €7.52 billion. Gross margin came in at 53.7%, well above guidance, helped by a strong mix of upgrade business and some one-off cost efficiencies. Net income rose to €2.29 billion, easily beating the €2.04 billion consensus. EPS landed at €5.90. The highlight of the quarter came from net bookings, which surged to €5.54 billion—roughly 25% above the €4.44 billion expected. Orders for EUV systems represented €2.3 billion of the total, reinforcing continued demand for next-gen AI-enabling chips. CFO Roger Dassen noted that High NA EUV systems—ASML’s most advanced and expensive product line—are now shipping, a key milestone for its long-term roadmap.

Despite the strong print, third-quarter guidance fell short of expectations. ASML projected revenue of €7.4–7.9 billion, missing the €8.3 billion consensus, with gross margins expected to narrow to 50–52% versus Q2’s 53.7%. The company maintained its full-year 2025 revenue growth forecast at 15%, implying sales of about €32.5 billion—essentially in line with analyst forecasts, but narrowing its prior range of €30–35 billion. Notably, R&D costs are expected to tick higher to around €1.2 billion in Q3, reflecting continued investment in High NA tools and future roadmap items.

However, what truly spooked investors was the abrupt tone shift on 2026. Last November, ASML confidently projected 2026 as a growth year. That optimism has now been tempered. CEO Christophe Fouquet, in both the press release and an internal interview, cautioned: “While we still prepare for growth in 2026, we cannot confirm it at this stage.” The company pointed to “increasing uncertainty driven by macroeconomic and geopolitical developments,” a likely allusion to U.S. tariff policy and the growing tensions between the U.S., EU, and China. President Trump’s threat of 30% tariffs on EU imports beginning August 1 has forced European firms like ASML into a holding pattern, as potential retaliatory actions from Brussels add another layer of complexity to cross-border chip tool shipments.

This tariff risk is not just theoretical. ASML serves a range of U.S.-based customers—Intel, Micron, GlobalFoundries—as well as Taiwanese and South Korean giants who manufacture chips in the U.S. The company’s CFO acknowledged in a pre-recorded interview that both direct and indirect effects of tariffs remain highly uncertain and that ASML is working with both customers and its supply chain to minimize disruption. Still, the tone is unmistakably more defensive than it was just one quarter ago.

For now, demand for AI infrastructure continues to support orders, with Fouquet reiterating that customer fundamentals—particularly those exposed to AI workloads—remain solid. High NA shipments are picking up, and ASML noted that lithography intensity is increasing across memory, especially DRAM. These are important positives, but the company’s unwillingness to offer reassurance beyond 2025 is hitting sentiment at a time when investor confidence in semiconductors is precarious. The Philadelphia Semiconductor Index (SOX) is near all-time highs, and recent outperformance by Nvidia and AMD has left the group vulnerable to any signs of macro or policy headwinds.

That fragility is showing up across peer names in premarket trading. Shares of U.S.-listed semiconductor equipment makers are following ASML lower: KLA is down 2.6%, Lam Research off 2.9%, Applied Materials lower by 2.7%, and Teradyne down 1.2%. If today's price action holds, it could mark a turning point in sentiment, particularly if tonight’s Beige Book or this morning’s PPI data reinforce stagflation or cost pressure concerns.

ASML’s stock is now down over 12% year-over-year, a stark contrast to the 10% gain in the S&P 500. That divergence reflects just how policy-sensitive global semiconductor capital equipment demand has become. Investors had entered this earnings cycle looking for reassurance that the AI infrastructure buildout would carry the group through macro volatility. ASML delivered strong Q2 results, but it couldn’t provide that forward comfort.

In sum, ASML’s report is a tale of two quarters: a strong Q2 beat underpinned by AI-fueled demand and robust bookings—but paired with a guidance downgrade and a caution flag for 2026 that is shaking confidence across the semiconductor ecosystem. As the first chip equipment report of the season, its tone may cast a long shadow over peers unless upcoming results and macro data can turn the tide.

WATCH: “The worst thing you can do is keep doing what works.”