Wall Street comments on ASML's financial report: Order volume explodes + guidance exceeds expectations, the company is at the starting point of a new technological cycle!

Mainstream institutions on Wall Street have reached a clear consensus after ASML released its earnings report that far exceeded expectations: the company is at the beginning of a multi-year growth cycle driven by AI computing power construction and storage technology upgrades. The explosive growth of its orders and strong performance guidance jointly confirm the turning point of prosperity in the semiconductor equipment industry.

The earnings report released on January 28 showed that ASML's new orders in the fourth quarter soared to €13.2 billion, setting a historical high, nearly doubling the market's general expectation (around €6.6 billion to €7 billion). This data marks that the semiconductor equipment industry has entered a strong upward channel.

The order structure has also undergone a significant transformation. Extreme Ultraviolet Lithography (EUV) orders contributed €7.4 billion, significantly exceeding expectations; crucially, the proportion of orders from memory chip customers reached 56%, surpassing logic chips for the first time, highlighting that the demand for high-performance memory such as HBM and DDR5 is becoming the core driving force for industry investment.

The company simultaneously provided a strong performance guidance for 2026, expecting the median revenue to reach €36.5 billion, a year-on-year increase of about 12%. The current backlog of orders, which has reached €38.8 billion, provides a high degree of certainty for performance realization in the next two years.

In light of this series of better-than-expected data, major institutions on Wall Street have generally raised their target prices. Among them, Citigroup and UBS raised their target prices to €1,400, JPMorgan adjusted it to €1,300, while Goldman Sachs set a target price of €1,270.

Orders "Crushing" Expectations: A Shock of €13.2 Billion

The core highlight of this quarter's earnings report is the new orders. ASML announced that the total order amount for the fourth quarter reached €13.2 billion, significantly surpassing market consensus, which was about €6.6 billion to €6.9 billion according to Visible Alpha, exceeding expectations by 89% to 93.6%, and also far exceeding the most optimistic buyer's estimate of about €8 billion.

Among them, Extreme Ultraviolet Lithography (EUV) orders contributed €7.4 billion, far higher than the analysts' general expectation of €4.4 billion, indicating that customers are actively locking in key equipment capacity in advance for future advanced processes (including 2nm and below technology nodes).

As of the end of 2025, ASML's total backlog has climbed to a historical high of €38.8 billion. This scale not only fully covers the company's system sales expectations for the entire year of 2026, but its visibility has also extended to 2027, providing strong certainty for future performance.

Structural Change: Explosive Demand for Memory Chips

This order data reveals the structural rotation of the semiconductor industry cycle. In the fourth quarter, the proportion of orders from memory chip customers reached 56%, corresponding to an amount of about €7.4 billion, surpassing logic chip customers' 44% (about €5.8 billion) for the first time, becoming the main driving force for current equipment investment.

UBS analysis pointed out that memory orders grew by as much as 71% year-on-year, primarily driven by two major trends: first, the DRAM technology node is undergoing a critical transition from 6F² to 4F², and second, the continuous demand growth for high bandwidth memory (HBM) and DDR5 driven by artificial intelligence applications. Customers are correspondingly increasing the number of process layers using extreme ultraviolet lithography (EUV) in DRAM production.**

Despite being surpassed by memory chips in terms of market share, the order momentum in the logic chip sector remains strong. Both Citigroup and Goldman Sachs pointed out in their reports that logic chip customers are actively reassessing the mid-term demand brought about by artificial intelligence and are accelerating capacity planning and equipment investment accordingly, reflecting that this sub-market is also on a clear path of recovery and expansion.

2026 Guidance: High Certainty of Growth

Based on its large backlog of orders, ASML's management has provided strong guidance for its 2026 performance. The company expects annual net sales to be between €34 billion and €39 billion, with a median of €36.5 billion, indicating a year-on-year revenue growth of approximately 12%, which is significantly higher than the previously expected low single-digit growth and about 3.5% to 4% above general market expectations.

In terms of profitability, management expects the gross margin for 2026 to remain in the range of 51% to 53%. From a product structure perspective, the extreme ultraviolet lithography (EUV) business is expected to see significant growth in 2026, while the deep ultraviolet lithography (DUV) business is expected to remain stable.

In terms of regional revenue structure, management's guidance also reflects the dynamic changes in global demand. The company anticipates that the revenue contribution from certain regional markets will experience a correction in the coming year, and this structural adjustment has been incorporated into the latest financial forecast. This expectation conveys a clear signal: the company is confident in the demand growth from other global markets and believes it is sufficient to support the achievement of overall revenue targets.

Q4 Revenue and Profit Steady, Q1 Guidance Positive

In addition to the highly anticipated order data, ASML's financial performance and short-term outlook for the quarter also remained robust. In the fourth quarter, the company achieved revenue of €9.718 billion, slightly above Citigroup's expectation of €9.643 billion and the general market expectation of €9.586 billion, which includes revenue recognition from two high numerical aperture (High-NA) extreme ultraviolet lithography systems.

The gross margin for the quarter was 52.2%, slightly exceeding the market expectation of 52.0%. Earnings per share were €7.34, slightly lower than some investment banks' expectations (for example, Citigroup's expectation of €7.61), but still within the company's own guidance range.

For the first quarter of 2026, the company provided a positive performance outlook: it expects revenue to be between €8.2 billion and €8.9 billion, with a median of €8.55 billion, significantly higher than the previous market estimate of €7.95 billion; at the same time, the gross margin is expected to remain stable in the range of 51% to 53%.

Wall Street Consensus: The Company is at a New Growth Starting Point, Huge Potential for 2027-2028

After evaluating ASML's latest performance, major investment banks have reached a consensus: the company is at the starting point of a new round of technological upgrade cycle, and the current valuation has not fully reflected its growth potential for 2027 to 2028.

Citigroup maintains a "Buy" rating and a target price of €1,400, believing that the general market expectations for 2026 will be revised upward, while the upside potential for 2027 to 2028 is even more critical. The bank predicts that sales could reach €44 billion in 2027, with earnings per share of about €40, noting that the current expected price-to-earnings ratio of about 30 times is still below its five-year average level JP Morgan gives an "Overweight" rating with a target price of €1300, describing the performance of this order as "explosive" and believing that there are almost no negative factors, expecting a double-digit percentage increase in market earnings expectations for 2027 and 2028.

Goldman Sachs maintains a "Buy" rating with a target price of €1270, pointing out that the company's 2026 revenue guidance is about 5% higher than the market consensus, and that customer certification progress for High Numerical Aperture (High-NA) lithography systems is proceeding smoothly.

UBS also gives a "Buy" rating with a target price of €1400, emphasizing that the adoption of High-NA technology will be the core driver of growth in the next phase, and believes that the company's current guidance is still conservative, with room for further upward adjustments in the future