ASML’s €45 Billion Revenue Target Faces a Washington Wrench

ASML raises 2026 revenue outlook to €45B amid AI-driven orders, but a US bill targeting China service revenue poses a major risk to 15-20% of long-term sales.

The Dutch lithography giant ASML has dramatically raised its 2026 revenue forecast to between €43 billion and €45 billion, up from a prior range of €36 billion to €40 billion, powered by an extraordinary first-half order book fueled by artificial intelligence demand. Yet even as the company maps out a 30% capacity expansion for its EUV and DUV systems next year, a bipartisan bill in the US Congress threatens to sever its most reliable profit stream: servicing the installed base of chip-making machines in China.

A Quarter That Beat the Street

ASML’s second-quarter results landed well ahead of expectations. Revenue hit €9.33 billion, net income reached €2.92 billion, and earnings per share climbed 6% year-over-year to €7.59. The gross margin expanded by 100 basis points to 54%. The company shipped 91 systems during the period, a 15% increase from the same quarter last year. For the third quarter, management guided for revenue of €11 billion to €12 billion — a 53% jump from the prior-year period — alongside a gross margin of 55% to 57%.

CEO Christophe Fouquet attributed the surge to unrelenting demand from the AI sector, which has pushed customers to place extensive pre-orders. To keep pace, ASML plans to boost production capacity for both EUV and DUV tools by 30% in 2027, and is evaluating a similar expansion for 2028.

The MATCH Act Looms

But the rosy operational picture is clouded by the MATCH Act, introduced in the US Congress in April 2026. The legislation goes beyond restricting sales of new machines to China: it would also prohibit ASML from servicing DUV immersion systems already installed there. That would be a sharp escalation from existing export controls, targeting the company’s most stable and margin-rich revenue stream.

The Dutch government has pushed back. In late June, the Netherlands’ foreign trade minister traveled to Washington to lobby against the bill, which remains in committee. Analysts estimate that 15% to 20% of ASML’s long-term revenue could be at risk if the measure passes in its current form. China currently accounts for roughly 20% of the company’s annual sales.

US Commerce Secretary Lutnick has separately voiced concerns about whether an ASML EUV machine may have remained in China in potential violation of export rules. Fouquet countered that the company maintains a comprehensive tracking system for all its equipment and only ships older-generation tools to Chinese buyers. Meanwhile, the US is backing startup xLight as a long-term competitor to ASML’s EUV technology, and a separate bill in Congress seeks to block DUV system deliveries to China entirely.

Wall Street Stays Bullish — For Now

Despite the geopolitical overhang, analysts remain broadly optimistic. Of the 43 analysts covering ASML, 38 rate the stock a buy or strong buy. Bernstein raised its price target following the earnings release. The positive sentiment mirrors a broader rally in semiconductor equipment makers riding the AI investment wave — contract manufacturer TSMC recently lifted both its annual forecast and capital expenditure plans.

ASML shares closed recently at €1,576.60, about 3.8% above their 50-day moving average of €1,519.28. The stock sits roughly 9.5% below its 52-week high of €1,748.00 reached in late June — a gap that looks modest given the double-digit gains of the past twelve months. Technical analysts see the €1,600 level as a key threshold: a breakout above it would signal that the market is pricing in the High-NA EUV production ramp while discounting political risk. A drop below the 50-day average could open the door to the 100-day moving average at €1,365.31.

A Tale of Two Scenarios

The bull case for ASML rests on its monopoly in lithography systems for cutting-edge chips. In July 2026, Intel announced it had started series production of its Panther Lake processors using ASML’s High-NA EUV technology — a milestone that validates the next chip generation. Memory makers SK Hynix and Samsung are also placing strong orders, underpinning the raised guidance. Bulls point to the planned 30% capacity expansion for Low-NA EUV systems in 2027 as a further catalyst.

The bear case centers on the service trap. Maintenance and high-margin add-ons have historically cushioned ASML during cyclical downturns. If the MATCH Act passes, that buffer could be severely weakened. The stock’s recent volatility suggests the market has yet to fully price in this risk. Skeptics also note the high cost and technical hurdles of High-NA EUV systems, arguing that broad market adoption may take longer than current expectations assume.

The Human Factor

Beyond geopolitics, ASML faces labor challenges in South Korea. A union at ASML Korea has grown to over 1,000 members, driven by dissatisfaction over bonus payments that lag behind those at Samsung and SK hynix. The company responded by announcing a special stock bonus and a global equity program for eligible employees running from 2027 to 2030.

For investors, the central question remains whether the AI-driven investment cycle can outweigh the political drag from Washington. The coming weeks will bring clarity: official statements from the Dutch foreign trade ministry and possible clarifications from the US Commerce Department are expected during the third quarter. Until then, ASML’s stock is caught between a record revenue outlook and a legislative threat that could rewrite the rules of its most profitable business.