ASML’s Stellar Quarter Overshadowed as MATCH Act Threatens 15% of Revenue

ASML beat Q1 expectations with €8.8B revenue, but shares fell 5% as Trump-Xi summit offered no chip détente and the MATCH Act threatens new export controls.

For ASML, the numbers told one story and the market another. Europe’s largest tech company posted a blockbuster first quarter — €8.8 billion in revenue, a net profit of €2.8 billion, and earnings per share of €7.15 that crushed the €6.00 consensus. Yet the stock closed at €1,295.20 on Friday, shedding 5% on the week as investors fixated on a gathering storm in Washington rather than the strength of the order book.

The catalyst was not the balance sheet but the absence of any détente on semiconductors from the Trump-Xi summit. US Trade Representative Jamieson Greer confirmed that chips and Nvidia sales were not central to the talks, dashing hopes of a partial easing. ASML, sitting at the crossroads of global chip demand and US export controls, took the brunt of the selloff. The stock briefly touched a new 52-week high earlier in the week before reversing sharply.

The MATCH Act’s Expanding Scope

The deeper worry is the bipartisan MATCH Act advancing through the US Congress. The bill aims to coordinate allies in cutting China’s access to every class of lithography machine — including older DUV immersion systems that have so far escaped the tightest restrictions. Unlike earlier rounds of export controls, the draft would also cover installation, maintenance, remote updates, and technical support. That matters because ASML’s service revenue carries above-average margins.

China was ASML’s single largest market last year, accounting for 33% of total revenue. In the fourth quarter, the share of system sales to China stood at 36%. By the first quarter of 2026, that figure had already fallen to 19%, reflecting both rising domestic demand and the cumulative effect of existing rules. ASML had pencilled in a further drop to roughly 20% for full-year 2026, but a tough new US law could push the decline well beyond that.

Bank of America estimates that a complete export ban would shave about 15% off ASML’s top line. The impact on operating profit would be marginally larger, given the high margin on service contracts. Ben Barringer at Quilter Cheviot pegs the risk from older lithography systems alone at roughly 5% of total revenue. JPMorgan’s Sandeep Deshpande calculates that earnings per share could fall by as much as 10% if the legislation becomes law in its current form.

Operating Momentum Remains Intact

None of that political noise has yet to dent ASML’s operational trajectory. The company delivered a gross margin of 53% in the first quarter, well above expectations, and management lifted the full-year 2026 revenue forecast to between €36 billion and €40 billion. The upgrade is underpinned by accelerated fab build-outs at TSMC, Samsung, and Intel, all of which continue to order ASML’s high-end EUV machines for leading-edge logic and memory production.

The forward price-to-earnings ratio sits at 32, backed by an annualised earnings growth rate of 23%, yielding a PEG ratio of 1.4 — a valuation that is ambitious but not disconnected from the growth story. Since the start of the year, the shares have still gained 31%, and they trade 28% above their 200-day moving average.

Analysts Split on Risk Timing

The legislative path remains uncertain. ODDO-BHF’s Stephane Houri notes that the MATCH Act is still in an early stage and must pass through the full congressional process. Bernstein, Berenberg, and Goldman Sachs all maintain buy recommendations, betting that the fundamentals outweigh the political headline risk for now.

The next concrete checkpoint comes in early July, when ASML reports second-quarter earnings. By then, the 150-day timeline embedded in the MATCH Act will also start to come into sharper focus. If the Netherlands and Japan can present their own strengthened controls, the pressure may shift toward a coordinated outcome. If not, the risk of unilateral US action — and a deeper hit to ASML’s China business — will only grow.