ASML's Double-Edged Rally: Weak US Jobs Data and a Fading China Exposure

ASML stock gained nearly 5% after a disappointing US jobs report fueled Fed rate cut hopes, but China's revenue share halved to 19% as export controls tighten, with a new US bill posing further risk.

A disappointing US labor market report sent ASML shares surging nearly 5% on Friday, but beneath the surface the Dutch chip-equipment giant is navigating a profound geographic shift that could reshape its risk profile. The stock closed at €1,628.00 after the Bureau of Labor Statistics revealed the economy added just 57,000 jobs in June, roughly half the 115,000 economists had expected. Investors immediately read the soft data as a green light for the Federal Reserve to ease monetary policy, driving the STOXX 600 and the AEX index to fresh records and lifting ASML to a weekly gain of 2.91%.

The advance has brought the shares within striking distance of their 52-week high of €1,748.00 set on June 30 — a gap of only 6.86%. Over the past 12 months, ASML has delivered a staggering 140.83% return, while the year-to-date tally sits at 64.73%. The technical picture shows the stock trading 41.73% above its 200-day moving average of €1,148.68 and 12.86% above the 50-day line of €1,442.48, though the 14-day relative strength index of 54.6 suggests the rally has not yet entered overbought territory.

China's shrinking footprint

While the market cheered the macro tailwind, the composition of ASML's revenue is undergoing a rapid transformation. In the first quarter of 2026, China contributed just 19% of total sales, down from 36% in the previous quarter. The steep drop reflects tightened US export controls that are forcing the company to recalibrate its geographic exposure. Despite the decline, ASML's management has reaffirmed ambitious targets: revenue guidance for 2026 now stands at €36-40 billion, and the long-term goal of €44-60 billion in annual sales with gross margins of 56-60% by 2030 remains intact.

The company posted net revenue of €8.8 billion and a profit of €2.8 billion in the first quarter, and it plans to ship roughly 60 low-NA EUV systems this year — a 25% increase over 2025. By 2027, capacity is expected to rise to 80 machines. The chip-manufacturing boom, fueled by artificial intelligence demand, has created a mismatch between customer needs and available supply, with CEO Christophe Fouquet noting that orders are outstripping output. Memory giants such as Samsung and SK Hynix are racing to lock in capacity with long-term contracts, and market observers already describe 2026 capacity as virtually sold out.

Political clouds over Eindhoven

The bullish narrative, however, faces an immediate political challenge. US lawmakers have drafted the MATCH Act, a bill designed to halt exports of advanced chip-making tools to China. Although still in proposal form, the legislation could quickly expand to cover older DUV systems, a segment where ASML holds a near-monopoly. A full embargo would not only hit new equipment sales but also cut off lucrative service revenue from installed machines in China. Given that ASML's stock has already priced in a great deal of optimism — the shares trade well above both their 50-day and 200-day averages — any negative surprise on the regulatory front could trigger a sharp correction.

JPMorgan analysts have cautioned that the relative outperformance of chip-equipment makers versus cloud providers may narrow, adding another layer of risk. The global market for semiconductor fabrication equipment is projected to reach $126 billion by the end of 2026, with ASML holding roughly a 25% share. The company's own guidance for the second quarter — net revenue between €8.4 and €9.0 billion and a gross margin slipping to 51-52% — will be the first concrete test of whether the China headwind is manageable.

All eyes on July's numbers

For the second quarter, due in mid-July, investors will scrutinize order intake above all. The lofty €36-40 billion revenue forecast for 2026 must be backed by tangible bookings, especially from memory makers. If the new orders fall short or the company steers toward the lower end of the range, the stock could face a swift pullback. The implied volatility of nearly 63% highlights the market's nervousness. For now, the combination of a dovish Fed signal and a booming AI capex cycle keeps the rally alive, but the margin for error is shrinking with every percentage point of Chinese market share that evaporates.