ASML posts record sales and warns its supply will fall short of chip demand through 2028

ASML builds the machines that print the most advanced computer chips, and almost every major chipmaker depends on them. That makes its quarterly report one of the clearest windows into how much the industry plans to spend on artificial intelligence. On Wednesday morning, the message was that customers want more equipment than ASML expects to be able to build.

The quarter

The Netherlands-based company reported third-quarter total net sales of €11.7 billion, which it called a record and which landed toward the high end of its own guidance. Gross margin was 57.5%, above guidance and up from 54.0% in the second quarter. Net income came to €5.0 billion, compared with about €2.9 billion in the prior quarter.

A large part of the beat came from the company's service and upgrade business, which ASML calls Installed Base Management. Those sales reached €3.3 billion, about €400 million more than ASML had guided. Chipmakers have been paying to upgrade machines they already own as a faster way to add output without building new factories.

The outlook

ASML expects fourth-quarter sales of €14.2 billion to €15.2 billion, with a gross margin of around 57%. For all of 2026, it now expects total net sales between €44 billion and €45 billion, with a gross margin around 56%. XTB described that as a raise to the lower end of the company's previous sales range.

The company also bought back about €4.1 billion of its own shares during the quarter under its 2026-2028 buyback program, and ended the quarter with about €12.7 billion in cash and short-term investments.

The supply warning

The most notable line in the release was about capacity, not sales. Chief Executive Christophe Fouquet said customers keep raising their equipment forecasts.

"Our customers continue to increase their short- and medium-term equipment demand forecasts with us, driven primarily by their views on the size and duration of AI-related investments."

ASML said some customers are interested in placing orders for 2029 and even 2030. With order momentum rising each quarter this year, the company now expects that its supply as currently planned for both 2027 and 2028 will not fully meet demand. It said it is investigating ways to increase 2028 capacity beyond the 30% increase it had previously communicated.

Why the market did not cheer

Strong numbers did not translate into a rally before the US open. Nasdaq 100 futures and European stocks gave back part of their earlier gains after the release, according to XTB, which pointed to the supply warning as one reason sentiment toward technology stayed soft. Investing.com reported that the stock had already slipped in Tuesday's US session and fell further in after-hours trading.

There are two ways to read a supply shortfall. For ASML, it signals a long runway of demand. For the wider AI hardware chain, it can mean bottlenecks: if the machines that make chips are scarce, chipmakers' own expansion plans may take longer to reach full output.

The report also landed in a nervous week for chip stocks. South Korea's KOSPI fell 5.46% on Tuesday as Samsung Electronics and SK hynix slid on worries about new memory competition from China and the payoff from AI spending. ASML's commentary points the other way on demand, at least for the most advanced equipment.

What to watch

ASML's investor call with Fouquet and Chief Financial Officer Roger Dassen is set for 9 a.m. Eastern. Listeners will want detail on which customers are driving the 2027 and 2028 demand, how the company plans to add capacity, and whether export restrictions on sales to China are changing its order mix.

Taiwan Semiconductor Manufacturing, ASML's largest customer for its most advanced machines, reports Thursday. Its spending plans for next year will show whether the demand ASML describes is turning into firm orders.