ASML: Strong Quarter, Uncertain Guidance

Key Metrics - ASML reported net sales of 6.2 billion euros for Q2 2024, increasing to 7.7 billion euros in Q2 2025, representing a 24% growth and beating expectations [1] - Earnings per share (EPS) rose from 4.01 euros in Q2 2024 to 5.90 euros in Q2 2025, marking a 47% increase and also beating expectations [1] - New units sold decreased from 89 to 67, a decline of 25% [1] - Net bookings remained flat at 5.5 billion euros, down 2% year-over-year [1] Company Performance - ASML's revenue and earnings increased by 24% and 47% year-over-year, respectively, despite a reduction in the number of systems sold [3] - The company is experiencing strong demand for its newer, high-end lithography technology, with 2.3 billion euros of net bookings specifically for higher-end systems [3] - ASML achieved a gross margin of 53.7% in the quarter [3] Market Outlook - The company expressed concerns about future growth due to uncertainties faced by semiconductor customers, influenced by trade restrictions and tariff policies [4] - CEO Christophe Fouquet noted that while fundamentals for AI customers remain strong, there is increasing uncertainty from macro-economic and geopolitical developments [4] - ASML is preparing for growth in 2026 but cannot confirm it at this stage [4] Investor Reaction - Following the cautious guidance regarding 2026, ASML shares fell by 8% in premarket trading [5] - Despite the short-term concerns, the long-term growth narrative remains intact, driven by ongoing demand for semiconductors and related manufacturing equipment [6] Geopolitical Context - Recent changes in the geopolitical landscape, such as the U.S. reversing a ban on Nvidia selling chips in China, may positively impact ASML's outlook [7] - The CFO attributed the second-quarter performance partly to tariffs having a "less negative" impact than expected, suggesting that ASML's caution regarding 2026 could be overly conservative if trends continue [7]