ASML Reports Record Orders and Strong 2026 Outlook on AI Demand

ASML, the Dutch maker of machines that build computer chips, reported record orders worth €13.2 billion in the last three months of 2025. This came as chip producers ramp up plans for more factories to meet growing needs for AI technology. The company, based in Veldhoven, also gave a positive outlook for 2026 sales and announced steps to return cash to shareholders.

Background

ASML makes the specialized equipment that chip factories use to create tiny patterns on silicon wafers. These machines are key for producing the advanced chips that power AI systems, smartphones, and other devices. The company holds a strong position in this market, especially with its extreme ultraviolet or EUV machines, which are the most advanced type and hard for others to match.

Over the past year, demand for AI has grown fast. Big tech firms and chipmakers like TSMC and Samsung have poured money into new plants. This has helped ASML's business. In 2025, the company hit record sales of €32.7 billion for the full year, up from before. Net income also reached a high of €9.6 billion. These numbers show how the shift to AI is changing the chip world.

Chip production has cycles of booms and slowdowns. After a weaker period in 2024, things picked up in late 2025. Customers started placing bigger orders as they saw AI demand holding strong. ASML's order backlog, or the work lined up for future delivery, grew to €38.8 billion by the end of 2025. That gives the company clear visibility into sales for the next couple of years.

Key Details

In the fourth quarter of 2025, ASML's net sales reached €9.7 billion, above what many expected. The standout was the orders: €13.2 billion total, more than double the €7.09 billion from the same period a year earlier. Of that, €7.4 billion came from EUV systems, the high-end machines that bring in the most profit.

For the first quarter of 2026, ASML expects sales between €8.2 billion and €8.9 billion. Gross margins, a measure of profitability before some costs, should stay between 51% and 53%, similar to 2025's 52.8%.

Shareholder Returns

ASML plans to buy back up to €12 billion of its own shares by the end of 2028. This move aims to return value to investors. The company also proposed raising its dividend for 2025 by 17% to €7.50 per share.

"In the last months, many of our customers have shared a notably more positive assessment of the medium-term market situation, primarily based on more strong expectations of the sustainability of AI-related demand," said Christophe Fouquet, ASML's chief executive.

ASML is making changes inside the company to focus more on engineering and new ideas. It plans to streamline its technology and IT teams. Workers and their representatives got word of these plans, with more details set to come out soon.

What This Means

The record orders point to chipmakers expanding capacity at a fast pace. TSMC, a major customer, said it would spend $52 billion to $56 billion on new equipment in 2026. That kind of spending should lead to more ASML machines in factories. Other players like Samsung are also ordering heavily, helping push up bookings.

AI is the main driver. Data centers need powerful chips to run models that learn and make decisions. This demand looks set to last, unlike shorter cycles in phones or computers. ASML expects 2026 sales of €34 billion to €39 billion, which could mean growth of up to 19% from 2025. Much of that will come from more EUV sales and business from machines already in use at customer sites.

The big backlog reduces risks from sudden drops in orders. It locks in revenue for months ahead. Still, the chip industry faces hurdles like trade rules that limit sales to China and possible tariffs. ASML has seen its China revenue fall, but growth elsewhere makes up for it.

Banks like UBS now see ASML revenue up 23% in 2026 and 14% in 2027. They point to strong spending on memory chips, like DRAM, which could rise 40% for ASML. TSMC's plans for more capital spending in 2027 add to the optimism.

ASML's market value topped $500 billion recently, making it Europe's biggest company by that measure. Its shares hit record highs after TSMC's spending news. This report keeps the positive momentum going into 2026.

The changes at ASML aim to keep it ahead as the industry grows. More focus on innovation means better machines for even smaller, faster chips. That positions the company to meet needs in healthcare, energy, cars, and farming, where advanced tech matters.

Overall, ASML's results show the AI push is real and spreading. Chip factories will need more tools, and ASML stands ready to supply them.