ASML Shares Decline Despite Major Manufacturing Milestone

ASML announces volume production readiness for its next-gen $400M High-NA EUV machines, yet shares drop over 4% amid sector rotation and strong 2025 results.

A significant technological achievement by Dutch semiconductor equipment leader ASML failed to impress the market on February 26th. The company announced its latest generation of High-NA EUV lithography machines are now ready for volume production. Instead of sparking a rally, the news contributed to a broad sell-off in chip stocks, sending ASML shares down more than 4 percent.

Strong Fundamentals Overshadowed by Sector Rotation

The decline occurred despite ASML reporting a historically strong financial performance. For the full year 2025, the company achieved revenue of €32.7 billion and a net profit of €9.6 billion. The fourth quarter alone delivered record revenue of €9.7 billion with a gross margin of 52.2 percent.

Looking ahead, CEO Christophe Fouquet provided guidance for 2026, forecasting revenue between €34 billion and €39 billion, with a gross margin projected in the range of 51 to 53 percent. The order backlog stood at €38.8 billion at the end of 2025. The company also announced a share buyback program of up to €12 billion through the end of 2028 and raised its dividend by 17 percent to €7.50 per share.

However, the stock closed at $1,463.22 on February 26th, a drop of 4.1 percent. This followed the equity reaching a 52-week high of $1,547.22 just one day prior, on February 25th. Market experts point to profit-taking after shares had nearly doubled in the preceding six months.

High-NA Technology Reaches Critical Production Milestone

The core of the announcement was a major step forward in advanced chipmaking technology. In an interview with Reuters, ASML's technology chief Marco Pieters confirmed that the new High-NA EUV systems have passed a critical threshold. These tools have already processed 500,000 wafers, achieved an operational availability of approximately 80 percent, and can print features with the precision required for next-generation semiconductor manufacturing.

This technology allows key clients like TSMC and Intel to produce more powerful and efficient chips by eliminating several costly manufacturing steps. Each machine carries a price tag of around $400 million—double the cost of the current EUV generation. Despite this readiness, Pieters noted that full integration into customer production lines will still take an estimated two to three years. ASML aims to increase the operational availability of these systems to 90 percent by the end of 2026.

Broader Market Shift and China Concerns Weigh on Sentiment

The immediate market reaction was driven by a sector-wide rotation following Nvidia's quarterly earnings report. Although the GPU manufacturer exceeded expectations, investors moved capital out of highly-valued semiconductor names and into previously underperforming software stocks. This shift contributed to the Nasdaq Composite index falling more than 1.5 percent.

Adding to near-term caution, ASML cautioned that its business in China is expected to decline to about 20 percent of sales in 2026, down from elevated levels in the prior year. This forecast is tempering short-term growth expectations. Nevertheless, the successful development of High-NA technology solidifies ASML's long-term position as an essential equipment supplier for the next generation of AI chips.