Financial Data and Key Metrics Changes - In Q1 2026, total net sales were EUR 8.8 billion, aligning with guidance. Net system sales reached EUR 6.3 billion, with over EUR 4.1 billion from EUV system sales and over EUR 2.1 billion from non-EUV system sales [5][6] - Gross margin for Q1 was at 53%, at the high end of guidance, primarily due to high-margin components in the installed base business [5][6] - Net income for Q1 was EUR 2.8 billion, representing 31.4% of total net sales, resulting in earnings per share of EUR 7.15 [6] - Q1 free cash flow was -EUR 2.6 billion, mainly due to the timing of down payments [6] - For Q2 2026, total net sales are expected to be between EUR 8.4 billion and EUR 9 billion, with gross margin anticipated between 51% and 52% [7][12] Business Line Data and Key Metrics Changes - Net system sales were split almost equally between logic (49%) and memory (51%) [5] - Installed base management sales for Q1 were EUR 2.5 billion, slightly above guidance [5] - The company expects installed base management revenue to grow significantly in 2026, driven by service revenue from the expanding EUV installed base [12] Market Data and Key Metrics Changes - The semiconductor industry growth outlook is solidifying, driven by AI-related infrastructure investments, increasing demand for advanced logic and memory chips [9][10] - Memory customers have confirmed they are sold out for the remainder of the year, with supply limitations expected to persist beyond 2026 [9] - Logic customers are adding capacity across multiple advanced nodes, with expectations of supply limitations beyond 2026 [10] Company Strategy and Development Direction - The company is executing a capacity expansion plan for 2026, aiming for at least 60 Low-NA EUV systems and increasing the move rates for HBM products [11] - The 2026 revenue guidance has been updated to between EUR 36 billion and EUR 40 billion, with a gross margin expectation between 51% and 53% [12] - The company is focusing on productivity upgrades for installed bases to meet short-term output requirements [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that demand continues to outpace supply, creating constraints across end markets, which drives customers to aggressively add capacity [9] - The company sees a strong year ahead and expects growth in 2026, supported by significant investments from customers [11] - Management emphasized the importance of ongoing discussions with customers to align capacity needs and ensure timely delivery [10][11] Other Important Information - ASML paid a third interim dividend of EUR 1.60 per ordinary share in Q1 2026 and intends to declare a total dividend of EUR 7.50 per ordinary share for 2025, a 17% increase compared to 2024 [7][8] - The company is making progress on technology, including improvements in Low-NA EUV productivity and advancements in High-NA systems [13][16] Q&A Session Summary Question: Updated 2026 revenue guidance and its sources - The increase in immersion outlook is primarily from non-China customers, with China expected to remain around 20% [19] Question: Gross margin guidance stability despite increased immersion - The gross margin guidance remains unchanged due to increased costs associated with hiring and ramping up production [21] Question: Customer visibility and growth profile for 2027 and 2028 - Discussions with customers are primarily focused on 2026, with some movement towards 2027, but 2028 is still too far to predict [26][27] Question: DUV capacity needs in relation to EUV tools - The company believes current DUV capacity is sufficient, with demand scaling alongside EUV [50] Question: Pricing model and customer behavior changes - Customers are more open about their expansion plans, but the company's pricing model is based on the value provided rather than market pressures [92][94]

ASML Holding NV - Key Takeaways from Investor Roadshow Industry Overview - **Company**: ASML Holding NV - **Industry**: European Semiconductors - **Date of Roadshow**: February 27, 2025 - **Location**: Edinburgh Core Points and Arguments 1. **Customer Base Dynamics**: - Increased reliance on TSMC due to challenges faced by other foundry customers. ASML acknowledges that the semiconductor ecosystem becomes more capital efficient with fewer customers operating at scale [3][8] - TSMC's global footprint is expanding with fabs in Arizona, Japan, and joint ventures in Europe, which may lead to more concentrated orders and lumpy bookings for ASML [3][8] - ASML intends to maintain pricing for its tools, focusing on sharing the enhanced value of its products while reducing lithography costs per wafer [3][8] 2. **Chip Architecture Changes**: - Transition to Gate All Around (GAA) architecture is expected to facilitate smaller feature sizes, although initial EUV layer counts will not increase [4][9] - The 6F² architecture for DRAM is projected to increase EUV layer counts from 4-5 layers to 10 layers by the end of the decade, indicating ongoing demand for ASML's technology [9][10] 3. **China Market Outlook**: - Revenue from China is expected to normalize to backlog levels, around the low 20% range, following a significant uplift in 2023 and 2024 [10][8] - High utilization rates at larger Chinese customers suggest ongoing demand, although there is less clarity regarding smaller customers [10][8] - ASML is cautious about local lithography players but does not see an immediate threat [10][8] 4. **Technological Developments**: - Hybrid bonding and potential moves to CFET (from GAA) are seen as opportunities for ASML, with expectations of initial lithography layer plateaus before increases [11][10] - Chiplets (3DIC) are viewed as complementary to existing technologies, allowing for continued scaling on the front end while advancing back-end packaging [11][10] Financial Metrics and Projections - **Market Capitalization**: €277.98 billion - **Revenue Projections**: - 2023: €27.56 billion - 2024e: €28.26 billion - 2025e: €33.01 billion - 2026e: €35.59 billion [6][8] - **Earnings Per Share (EPS)**: - 2023: €19.90 - 2024e: €19.24 - 2025e: €25.71 - 2026e: €28.24 [6][8] - **Price Target**: €680.00 based on a mid-cycle P/E multiple of approximately 24x [12][8] Risks and Considerations - **Upside Risks**: - Increased logic and HBM spending, expanding servicing margins, and tech sovereignty programs [14][8] - **Downside Risks**: - Weaker foundry spending, potential slowdowns in DRAM, and inflationary pressures impacting orders [14][8] Additional Insights - ASML's focus on maintaining pricing and enhancing product value is crucial in a competitive landscape, particularly with the evolving dynamics of its customer base and technological advancements [3][8] - The normalization of revenue from China and the strategic emphasis on local solutions highlight the importance of adapting to regional market conditions [10][8]