ASML Holding NV, the Dutch semiconductor equipment giant, delivered record-breaking fourth-quarter bookings fueled by the artificial intelligence boom, yet failed to satisfy investor expectations as analysts raised persistent concerns about the company's ability to sustain its momentum and expand manufacturing capacity.
Record Bookings Amid AI Infrastructure Surge
The Veldhoven-based company announced fourth-quarter bookings of €13.2 billion ($15.8 billion), dramatically surpassing the average analyst estimate of €6.85 billion. This remarkable performance was driven by soaring demand for ASML's most sophisticated equipment as technology companies worldwide race to build AI infrastructure.
Chief Executive Officer Christophe Fouquet emphasized in an interview with Bloomberg TV that "the last three months have brought a lot of clarity" about AI's transformative impact on the semiconductor industry. The AI boom has extended into 2026, defying concerns about overinvestment and helping push ASML's market value beyond $500 billion this month.
Capacity Constraints and Revenue Guidance Challenges
Despite the impressive bookings, analysts expressed skepticism about ASML's capacity to meet the high end of its revenue guidance for the year. Chief Financial Officer Roger Dassen acknowledged during an analyst call that achieving the upper range of the company's revenue forecast depends on overcoming two critical constraints.
"We are ramping during the year to accommodate the demand," Dassen explained. "But the demand is also a little bit dependent on the progress that our customers are making in terms of the completion of their own chip plants during the year."
The company's revenue guidance for the current year stands between €34 billion and €39 billion, representing an increase from previous projections. Total net sales reached €32.7 billion in 2025, demonstrating the company's substantial growth trajectory.
Market Reaction and Organizational Changes
ASML's shares fell 1.9% to €1,194.40 in Amsterdam trading, despite initially reaching a record high following the strong bookings announcement. The company, which holds the title of Europe's most valuable firm, also revealed plans to cut approximately 1,700 jobs, representing about 4% of its workforce.
These job reductions will primarily affect employees in the Netherlands, with some positions also eliminated in the United States, as part of ASML's initiative to streamline its organizational structure.
EUV Dominance and Technological Leadership
More than half of the fourth-quarter bookings, totaling €7.4 billion, were for extreme ultraviolet (EUV) lithography machines. ASML remains the sole producer of these cutting-edge tools essential for manufacturing advanced semiconductors, counting all leading chip manufacturers among its customers.
This includes industry giants Taiwan Semiconductor Manufacturing Corp. and Intel Corp. ASML's machinery plays an integral role in producing Nvidia Corp.'s AI accelerators, which form the backbone for training and running AI models in data centers worldwide.
The company recognized revenue for two high NA EUV machines during the quarter, representing state-of-the-art technology with individual price tags exceeding €350 million each.
Industry Context and Future Outlook
Ben Barringer, head of technology research at Quilter Cheviot, commented that "ASML has knocked it out of the park when it comes to order numbers. Given the strength of the order book, we fully expect it to raise guidance throughout the year."
Bloomberg Intelligence analysts Masahiro Wakasugi and Takumi Okano noted that ASML could achieve the top of its €34-€39 billion sales goal in 2026, based on strong fourth-quarter orders and an order backlog of €38.8 billion for chipmaking-tool systems.
TSMC's substantial capital expenditure plan exceeding $52 billion in 2026, along with robust spending among DRAM suppliers including SK Hynix, Samsung, and Micron, will significantly contribute to ASML's continued sales growth.
Global Market Dynamics and China's Role
China remained ASML's largest market during the fourth quarter, accounting for 36% of net system sales. However, the company expects this percentage to decline to approximately 20% of revenue moving forward, according to CFO Roger Dassen.
ASML faces restrictions on selling its most advanced EUV lithography machines to China due to US-led export controls aimed at limiting the country's semiconductor advancement. The company is also prohibited from selling its most sophisticated deep ultraviolet (DUV) tools to Chinese customers.
Despite these limitations, Chinese chipmakers continue purchasing older-generation equipment for manufacturing mature chips, with machines shipped to China currently eight generations behind ASML's most advanced models.
Strategic Initiatives and Industry Perspective
ASML announced a new share buyback program of up to €12 billion through the end of 2028, representing approximately 2.5% of the company's current market capitalization. This strategic move reflects management's confidence in the company's financial strength and future prospects.
Nvidia CEO Jensen Huang recently characterized the global rush to build AI data centers as "the largest infrastructure build-out in human history," estimating a need for "trillions of dollars" in additional investment over coming years during remarks at the World Economic Forum in Davos.
Major technology companies including Meta Platforms Inc. and Microsoft Corp. are investing hundreds of billions of dollars in data center construction, driving chipmakers to expand capacity and consequently increasing demand for ASML's specialized equipment.
Looking ahead, ASML will discontinue reporting quarterly bookings, arguing that this metric no longer accurately captures business momentum. The company reported fourth-quarter net income of €2.84 billion, which fell short of analyst estimates despite the record order intake.
