ASML’s €400 Million Machines Are at the Center of a Political Firestorm — And Earnings Are the Real Verdict

ASML Q2 earnings: CEO rebuts US claim of EUV diversion to China; investors eye order book, 2027 guidance, and stock's 59% YTD rally.

The semiconductor industry is riding a historic upcycle, and ASML, the Dutch lithography giant, sits at the epicentre of both the boom and a deepening geopolitical storm. When the company releases its second-quarter results on Wednesday, investors will be parsing not only the order book and revenue guidance but also the fallout from a high-stakes accusation by a senior US official that its flagship EUV machines may have found their way into Chinese factories — a charge ASML’s chief executive vigorously denies.

US Commerce Secretary Howard Lutnick last week raised the spectre of unauthorised transfers of ASML’s extreme ultraviolet (EUV) lithography systems, the $400 million machines that are essential for producing the most advanced AI chips. CEO Christophe Fouquet hit back, insisting that every high-end tool is tracked with an airtight system that rules out any risk of diversion or reverse engineering. The controversy adds a layer of uncertainty to an already loaded earnings event, given ASML’s monopoly on EUV technology and the fact that it only sells older deep ultraviolet (DUV) equipment to China.

Analysts expect the company to report quarterly revenue in a range of €8.4 billion to €9 billion for the three months ended June. More important than the headline figure will be ASML’s outlook for 2027, particularly the trajectory of EUV orders. Industry forecasts call for a sharp ramp in shipments from 48 EUV systems in 2025 to 69 this year, as the next-generation High-NA EUV tools begin to reach customers. The price tag of a single High-NA machine — roughly €400 million — underscores the scale of capital expenditure required to sustain the AI chip revolution.

At the same time, the older DUV line continues to pull its weight. Chinese chipmakers have increasingly turned to multi-patterning techniques with DUV tools to achieve sub-100-nanometer features, challenging the notion that EUV is the only route to modern semiconductor nodes. That resilient demand was part of the reason ASML raised its 2026 revenue guidance in April, lifting the range from €34 billion–€39 billion to €36 billion–€40 billion. Wednesday’s report will test whether production capacity can keep pace with that upgraded target.

The stock itself has had a spectacular run but has recently cooled. Shares closed last week at €1,574.20, down 0.51% on Friday and off 3.30% over the preceding seven days. That leaves them about 10% below the all-time high of €1,748.00 reached on June 30. Yet the longer-term picture remains dazzling: a year-to-date gain of 59.28% and a 12-month advance of 128.94%. Technically, the 14-day relative strength index sits at a neutral 51.1, while the shares trade 6.53% above their 50-day moving average of €1,477.77 and nearly 35% above the 200-day average of €1,166.58.

Valuation is a sticking point for some. On a forward earnings basis the price-to-earnings ratio stands at roughly 48, but the trailing multiple is nearer 60.3 — slightly below the semiconductor peer average of 65.1 but above the level that some analysts consider fair at 53.5. Among institutional investors, the first quarter saw mixed signals: Kestra Advisory Services and Account Management LLC trimmed their positions, while Petix & Botte Co and Gradient Investments added significantly. The consensus on Wall Street rates ASML a “Moderate Buy,” with average price targets for the US-listed shares hovering around $1,854.

The broader chip sector continues to supply the bullish backdrop. SK Hynix made a blockbuster Nasdaq debut on July 11, raising $30 billion and closing at $168.01, well above its issue price. Samsung Electronics reported a preliminary second-quarter operating profit of 89.4 trillion won ($58.4 billion), a surge of more than 1,810% year-on-year fuelled by AI chip demand. Applied Materials, for its part, raised its 2026 growth forecast for semiconductor equipment to over 30% from an earlier 20%.

ASML’s order backlog stood at €38.8 billion at the end of the first quarter, and investors will be watching closely on Wednesday to see whether net orders are accelerating fast enough to justify the current valuation — and to absorb the political noise. One day later, Taiwan Semiconductor Manufacturing Co. reports its own quarterly numbers, providing a direct read on demand for the High-NA EUV systems that ASML is betting its future on. For a company that controls the most critical tool in the AI chip supply chain, the next 48 hours could determine whether the recent selloff was merely a pause in a secular rally or the start of a more cautious reassessment.