ASML, the Dutch company that dominates the market for semiconductor lithography equipment, posted third-quarter net profit more than 20% above market expectations, lifted by the artificial intelligence boom. Even so, some investors said the results fell short of the heightened expectations built into the stock.
ASML said in its third-quarter earnings release on the 14th that net profit exceeded market estimates by more than 20%, delivering an earnings surprise, according to Bloomberg.
Total third-quarter revenue came to 11.662 billion euros (about 17.5 trillion won), with net profit at 4.96 billion euros. Revenue was in line with the market estimate of 11.7 billion euros, while net profit topped the consensus of 4.11 billion euros by 20.7%. The gross margin was 57.5%, above the top end of the company's 57% guidance. The operating margin came to 44.4%, and basic earnings per share were 12.95 euros.
ASML also raised the lower end of its full-year revenue outlook by 1 billion euros from the previous quarter. The company now projects annual revenue of 44 billion to 45 billion euros. Decisions by Samsung Electronics and TSMC during the quarter to adopt ASML's next-generation High-NA EUV lithography systems appear to have helped.
ASML said demand for chipmaking equipment should stay solid over the medium to long term. "Customers are showing a strong willingness to place orders in advance for 2029 and even 2030 volumes," Chief Executive Christophe Fouquet said, adding that the company is reviewing ways to expand 2028 capacity beyond the previously announced 30% increase. Still, with revenue coming in slightly below market estimates, some analysts said the results did not meet investors' elevated expectations.
A gradual decline in China sales is also expected to weigh on future results. ASML projects China will account for 20% of revenue this year. That is unchanged from its earlier forecast but down from 29% last year and 36% in 2024. Global export controls on chip equipment bound for China, along with China's own push to develop domestic tools, point to further erosion in China revenue. In July, The Information reported that an unnamed Chinese company had begun manufacturing immersion deep ultraviolet (DUV) lithography equipment. Analysts expect China's share of sales to fall to 15% by 2028.
ASML is the only company that makes the most advanced lithography systems required to produce the data center chips powering the AI boom. Because its cutting-edge machines take more than a year to deliver from the time they are ordered, ASML's results serve as a barometer for the semiconductor industry.