ASML’s Record Guidance Fails to Ignite Rally as Options Market Overpriced the Move

ASML shares barely moved after earnings despite high implied volatility. Solid Q2 results and raised 2026 guidance failed to excite as AI spending doubts and China risks weigh.

The options market had braced for fireworks. Traders priced in an 8.36 per cent swing in ASML shares for Wednesday’s earnings release — more than double the average post-report move of the past four quarters. What they got instead was a damp squib: the stock slipped 1.74 per cent to €1,532.80, leaving the Dutch chip-equipment giant just 11 per cent below the all-time high of €1,748.00 hit on 30 June.

The disconnect between the implied volatility and the actual price action underscores how far expectations had already run ahead of results. ASML’s second-quarter figures came in solid enough: revenue of €9.3 billion, a gross margin of 54.0 per cent and net profit of €2.9 billion. More importantly, management raised its 2026 revenue guidance for the second time this year, now targeting €43 billion to €45 billion — well above the Bloomberg consensus of €39.3 billion. Third-quarter guidance points to revenue between €11 billion and €12 billion and margins improving to 55–57 per cent.

Yet the market yawned. The broader semiconductor complex has been under pressure as investors question whether the massive capital spending on artificial intelligence can sustain its current pace. Added to that, the geopolitical shadow over ASML’s China business has lengthened. Chinese customers are expected to account for roughly 20 per cent of 2026 revenue — a smaller share than in prior years in proportional terms, but still rising in absolute euros as the total grows. Export controls already bar sales of EUV and the most advanced DUV machines to China, and further restrictions could tighten the screw.

Capacity expansion signals confidence

CEO Christophe Fouquet struck an unusually upbeat tone on demand visibility. Persistent AI investment and progress in related technologies are driving orders for advanced logic and memory chips, he said, leading customers to accelerate their own capacity plans and commit across the product portfolio. Order intake remained exceptionally strong in the first half, and ASML is now laying out a major capacity ramp for 2027 and beyond:

• Low-NA EUV capacity of about 65 units in 2026 will rise 30 per cent in 2027, with a further 30 per cent increase under review for 2028.
• DUV immersion capacity of roughly 130 units in 2026 will also increase 30 per cent next year, with another 30 per cent step being examined for 2028.

The expansion reflects the AI boom’s deepening imprint on the entire semiconductor supply chain. Taiwan Semiconductor Manufacturing, one of ASML’s biggest customers, reported June revenue that surged 68 per cent year on year, driven by strong chip demand. UBS analysts said in a 10 July note that new fab builds and AI-driven appetite for cutting-edge chips would give ASML a stronger second half.

Analysts split as valuation stretches

Before the release, analyst views were unusually divided. Bernstein and Bank of America reaffirmed buy ratings and raised their price targets — BofA’s Didier Scemama went to $2,345 from $2,268, while Wells Fargo lifted its target to $2,200 from $1,750, citing a higher forecast for the global wafer-fab-equipment market, now seen at $190 billion in 2027 versus $180 billion previously. But Zacks rated the stock a sell ahead of the report, noting ASML had beaten earnings estimates only twice in the past four quarters and had missed twice, with an average negative surprise of 4.54 per cent.

The valuation alone gives pause. At 58 times trailing 12-month earnings and 48.6 times forward earnings, ASML trades well above its five-year average — leaving little room for error even if the numbers are strong.

Second-half delivery becomes the real test

Investors will now focus on the back-loaded nature of the year. ASML posted roughly €17.5 billion in revenue during the first half (€8.8 billion in Q1 and an expected €8.7 billion in Q2). To hit the new annual guidance, the company must deliver about €20.5 billion in the second half — a distribution that makes shipment timing more critical than a single quarter’s beat.

Adding to the uncertainty, ASML stopped disclosing quarterly order intake from the first quarter of 2026, arguing that large individual orders can distort trends. That metric will now be published only once a year. Without it, analysts have lost one of the clearest windows into future demand. Wednesday’s price reaction was therefore more about management’s commentary on the second-half delivery rhythm, the outlook for China, and updates on High-NA EUV technology for 2027.

Technicals still intact despite the dip

Even after Wednesday’s pullback, the stock remains in a clear uptrend. Year-to-date the gain stands at 55.09 per cent, and over 12 months it has more than doubled, up 116.16 per cent. The shares continue to trade above both their 50-day moving average of €1,495.26 and their 200-day average of €1,176.80. The 30-day annualised volatility of 64.86 per cent — and the fact that the stock is still 158 per cent above its 52-week low of €593.60 from August 2025 — shows how far and fast this rally has travelled.

The Philadelphia Semiconductor Index has fallen as much as 16 per cent from its June peak amid worries that the chip cycle may have already peaked. TSMC’s own results, due a day after ASML’s, will provide another key data point for the sector. For now, the gap between a record revenue forecast and a tepid stock response captures the central tension of ASML’s story: AI-driven demand is real and accelerating, but valuations, geopolitics and the sheer scale of expectations leave little margin for surprise.