Woofun AI reports that ASML’s second-quarter financial results significantly exceeded market expectations, accompanied by a rare and detailed capacity expansion roadmap for 2027 and 2028 that directly addressed lingering concerns regarding the sustainability of artificial intelligence-driven demand. This disclosure triggered an immediate and unified response from major Wall Street investment banks, including Goldman Sachs, JPMorgan Chase, and Barclays, which maintained or reiterated buy ratings based on the validation of the AI supply bottleneck theory and the rejection of bearish narratives predicting memory prices would peak in 2028.

The company’s second-quarter revenue reached €9.3 billion, surpassing Bloomberg’s market consensus estimate of €8.9 billion, while its gross margin stood at 54%, well above the previously guided range of 51%-52%. Building on this momentum, ASML raised its full-year 2026 revenue guidance from an initial €36 billion to a revised range of €40 billion to €45 billion representing an approximately 11% increase over market consensus.

Concurrently, the full-year gross margin guidance was elevated to 54%-56%, signaling sustained profitability pressures being managed effectively despite rapid scaling.

A critical component of the update was management’s commitment to expanding low numerical aperture EUV and immersion DUV production capacity by approximately 30% across 2027 and 2028. This explicit roadmap directly influenced market sentiment, triggering substantial upward revisions in profit expectations for 2028 as investors recalibrated their models to account for the accelerated hardware deployment required to support next-generation AI infrastructure.

Following the announcement, ASML’s stock price in Amsterdam rose by approximately 4%, while Nasdaq 100 index futures increased by about 40 basis points, reflecting broader market optimism. In Seoul, SK Hynix shares surged 8.8% in a single day, building on a previous 27% increase in its American Depositary Receipts. Goldman Sachs maintained a buy rating with a 12-month target price of €2,000, implying roughly 29% upside from current levels, while JPMorgan Chase upheld an overweight rating with a target price of €1,900.

Detailed metrics for the second quarter revealed comprehensive outperformance across all core financial indicators. Revenue totaled €9.327 billion, exceeding consensus by 6%, while EBITDA reached €3.456 billion, beating estimates by 13%. Earnings per share were €7.58, approximately 11% above consensus, and the 54% gross margin was roughly 230 basis points higher than market expectations. For the third quarter, ASML guided revenue between €11 billion and €12 billion, with a median of €11.5 billion representing a 12% premium over consensus; the gross margin guidance of 55%-57%, with a median of 56%, implies EBITDA will be approximately 26% higher than expected, or 350 basis points above consensus margins.

Woofun AI data shows that JPMorgan Chase analyst Sandeep Deshpande attributed part of this outperformance to the Installed Base Management (IBM) business, which generated approximately €300 million more than anticipated. Driven by software-led productivity upgrades and the continued expansion of the EUV service installed base, this segment is projected to grow over 30% this year, providing additional structural support for overall gross margins.

The capacity expansion roadmap provided specific unit projections that exceeded buy-side expectations. ASML stated it would expand low numerical aperture EUV capacity from about 65 units in 2026 to approximately 85 units in 2027, and is studying a further expansion to about 110 units in 2028. Simultaneously, immersion DUV capacity is set to increase from about 130 units in 2026 to roughly 169 units in 2027, and further to approximately 220 units in 2028. These figures represent a significant acceleration in hardware availability compared to previous industry assumptions.

Goldman Sachs calculated that these plans imply low numerical aperture EUV shipments will reach 85 and 110 units in 2027 and 2028 respectively, far surpassing market consensus of 85 and 89 units. Immersion DUV shipments are projected to hit 169 and 220 units, significantly exceeding consensus estimates of 137 and 146 units. JPMorgan Chase noted that the 2028 guidance exceeds the bank’s previous highest sell-side forecast, with rough estimates suggesting ASML’s 2028 earnings per share could exceed €65. Goldman Sachs’ trading desk characterized the target of about 110 EUV units in 2028 as falling into the 'super optimistic range' of 110 to 120 units, far above the sell-side consensus of about 89 units.

Management described the order intake situation as 'extremely strong,' noting that ASML has essentially locked in most EUV orders needed for 2027 and received considerable orders for 2028. This robust order book underpins the confidence in the capacity expansion timeline and suggests that demand for lithography equipment remains unconstrained by customer hesitation.

In the advanced logic sector, ASML highlighted that customers are simultaneously increasing capacity at 5/4/3 nanometer nodes to meet AI demand while aggressively pushing for 2-nanometer mass production and beginning preparations for the transition to 1.4-nanometer processes. The company expects advanced logic revenue to grow by approximately 25% year-on-year in 2026. In memory, tight supply of DDR and HBM is driving accelerated investments, with the enhancement of EUV and advanced immersion lithography intensity further boosting equipment demand. Memory revenue is expected to grow by about 75% year-on-year in 2026.

Goldman Sachs’ trading desk observed that as the memory market transitions to advanced 1c/1d nanometer nodes required for HBM4/HBM5 and traditional server DRAM, manufacturing is undergoing a fundamental shift. The number of EUV layers in 1c DRAM has increased to over five layers, while 1d and 0a generations are planned to fully adopt EUV technology across all layers. With deep ultraviolet multiple patterning processes reaching physical limits, ASML emerges as a major beneficiary of this structural transformation, as the wafer strength required for HBM is far higher than for traditional DRAM.

This dual expansion in logic and memory is severely squeezing global wafer fab capacity, keeping memory prices elevated for a longer period. Given the structural complexities of transitioning to advanced nodes, bearish arguments predicting that memory prices will peak before 2028 or that supply gaps will significantly ease appear premature, as the technological barriers to rapid capacity scaling remain high.

Barclays analyst Simon Coles stated that ASML provided most of what investors were expecting, noting that the guidance for low numerical aperture EUV capacity in 2027 and 2028 should reduce market disputes about supply constraints. He highlighted that the order amount for low numerical aperture EUV in the first half of the year could reach €22 billion, hitting a historical record level. JPMorgan Chase’s Sandeep Deshpande believed that although the company did not reach 90 units of EUV capacity in 2027, 'we think this is not significant,' as the 2028 guidance far exceeds expectations and the 2026 revenue growth rate of about 35% surpasses current market expectations for the overall wafer fab equipment industry, indicating effective guidance of about 30% growth over the next two years.

Morgan Stanley analyst Lee Simpson pointed out that although the company no longer discloses order data, management stated that order intake in the first half of the year remained 'very strong,' with customers seeking to accelerate capacity expansion, indicating strong sales momentum for 2027. Jefferies analyst Janardan Menon took a relatively cautious stance, believing that the company's outlook comments are mixed, with the strong growth in sales and gross margin of the Installed Base Management business being particularly positive, but the 2027 EUV guidance falling below recently rising market expectations. Oddo BHF expects market consensus profit forecasts to be revised upward by about 20%, stating that 'ASML remains an unmatched story of technological dominance, now benefiting from a fundamentally different cycle driven by AI.'