ASML Holding ASML continues to dominate the lithography-based semiconductor equipment market, delivering strong performance in the first quarter of 2026, driven by robust demand from AI-related infrastructure and advanced semiconductor nodes. The company reported total net sales of €8.77 billion in the first quarter of 2026, reflecting solid year-over-year growth of 13.3%.
Traction in logic and memory equipment supported the growth as these products are in high demand for inference, training, deploying and model optimization required by AI data centers and high performance computing facilities. In the first quarter of 2026, ASML’s net system sales came in at €6.28 billion, while Installed Base Management contributed €2.49 billion, highlighting the growing importance of ASML’s recurring revenue streams.
The installed base business continues to benefit from performance upgrades and rising utilization of EUV systems, reinforcing long-term revenue visibility while net system sales gains from traction across DUV technologies like Argon Fluoride Immersion, Argon Fluoride Dry, Krypton Fluoride and Mercury I-line and emerging EUV processes. Since AI processes are now needing more complex chips, ASML’s advanced equipment is in demand.
ASML is able to charge a premium for its advanced lithography tools, ensuring robust profitability. In the first quarter of 2026, ASML’s gross margin at 53% and its operating margin improved to 36%. Net income increased to €2.76 billion, representing 31.4% of total net sales. Regionally, demand remained strong across key semiconductor hubs, supported by aggressive capacity expansion plans from leading chipmakers.
Another tailwind for ASML’s lithography systems is the accelerating investments by customers across logic and memory to match the rising demand for chips globally. Looking ahead, ASML expects continued growth, projecting full-year 2026 net sales between €36 billion and €40 billion, with gross margins ranging from 51% to 53%. The company anticipates second-quarter 2026 sales between €8.4 billion and €9 billion.
ASML is effectively the leading player in the lithography market for its own installed base, especially in EUV space. However, in the broader semiconductor equipment market, ASML competes with companies like Lam Research LRCX and Applied Materials AMAT.
Lam Research is an established wafer fabrication equipment manufacturer that is established in the memory space. Lam Research’s memory segment, accounting for both Dynamic Random Access Memory and Non-Volatile Memory divisions, is gaining traction on the back of AI.
Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. As chips become more complex with AI and high-performance workloads, Applied Materials’ tools aid in designing and making efficient and smaller node chips.
Shares of ASML have gained 38% year to date compared with the Computer and Technology sector’s growth of 6.2%.
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From a valuation standpoint, ASML trades at a forward price-to-sales ratio of 12.16X, higher than the sector’s average of 6.49X.
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The Zacks Consensus Estimate for ASML’s 2026 and 2027 earnings implies year-over-year growth of 28.5% and 29.9%, respectively. The consensus estimate for fiscal 2026 has been revised upward in the past seven days.
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ASML currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).