ASML Wins Broader High-NA EUV Commitments as Shares Slip 1.8%

ASML Holding N.V. raised its 2026 revenue outlook to EUR 43 billion to EUR 45 billion as customers increase capacity for advanced logic and memory. The company generated EUR 9.3 billion of revenue in the second quarter, up 21.3% year-over-year, while net income reached EUR 2.9 billion. Management expects EUV system sales to grow more than 45% this year, while memory-related system sales are expected to increase more than 75%. Installed-base revenue reached EUR 2.8 billion in the second quarter, nearly EUR 300 million above guidance, and the company expects that business to grow more than 30% this year. ASML said customers are already planning capacity for 1.4-nanometer chips, while advanced logic and DRAM are both seeing increasing lithography intensity, and Intel is already using a High-NA EUV system on its 18A process to produce some Core Ultra Series 3 processors. Management expects China to account for around 20% of 2026 sales, while restrictions on advanced semiconductor equipment can limit what ASML is allowed to sell into the country, and the stock trades at about 28.9x forward earnings.

UBS analyst Francois-Xavier Bouvignies maintained a constructive outlook on European semiconductor stocks heading into third-quarter 2026 earnings, naming ASML Holding NV, ASM International NV and STMicroelectronics NV as his top three picks in a September 29 research note. The investment bank raised its wafer-fab equipment forecast for 2026 through 2028, projecting total WFE reaching approximately $225 billion in 2027, up 43% year-over-year, with potential to climb toward $275 billion to $300 billion by 2028, and it keeps 2027-2028 earnings estimates more than 10% above consensus across the sector. ASML remains the top pick with a Buy rating and a €2,350 price target, and UBS expects the company to guide fiscal 2027 revenue growth above 30% year-over-year when it reports third-quarter results on October 14, with its third-quarter revenue estimate of €12.1 billion sitting 3% above consensus. ASM International is second, with UBS forecasting 36% revenue growth in fiscal 2027 versus consensus at 29% and 33% growth in 2028 versus consensus at 19%, translating to EPS estimates 10% above consensus in 2027 and 20% above in 2028 ahead of results due October 27. STMicroelectronics completes the top three with a Buy rating and €80 price target, as UBS sees 2027 EPS roughly 20% above consensus, silicon photonics revenues reaching about $2.0 billion in 2027 and $2.5 billion in 2028, and total datacenter revenues of approximately $2.5 billion, or about 14% of group sales, in 2027 rising to roughly $3.8 billion, or 19% of group sales, by 2028, with fourth-quarter revenue guidance expected up approximately 10% quarter-over-quarter when it reports on October 29.

Wells Fargo says semiconductor capital-equipment companies could be the biggest near-term beneficiaries of a potential TSMC expansion of 2-nanometer production. Analyst Joe Quatrochi wrote that reports of the possible capacity increase should be viewed as a potentially incremental positive opportunity for semi cap companies, though timing, size and node details are still unconfirmed. Building additional 2nm capacity would require significant spending on lithography, deposition, etching and inspection equipment, adding a layer of demand for suppliers supporting TSMC's fabs. Quatrochi pointed to the so-called Silicon Prairie as a logical location for a potential second U.S. campus, citing existing semiconductor operations in Texas from Texas Instruments, Samsung, Coherent and Terafab, plus TSMC's design service center in Austin. TSMC's major 2nm customers include Apple, Nvidia, AMD and Qualcomm, with Google, Broadcom, Marvell, Amazon and OpenAI also expected to use the advanced process.

Taiwan Semiconductor Manufacturing Co is accelerating its 2-nanometre capacity expansion, with monthly output projected to reach about 120,000 wafers by the end of 2026, ahead of earlier expectations of 90,000 to 100,000 wafers, according to Taiwanese publication EDN. Customers including Apple, Nvidia, AMD, Qualcomm and MediaTek have recently raised orders for TSMC's 2nm family capacity by 10% to 20%, the report said, citing industry sources. TSMC is bringing five 2nm fabs online this year, two in Hsinchu and three in Kaohsiung, according to senior vice president Hou Yung-ching. Hou said first-year 2nm wafer output would be 45% higher than the first-year output of 3nm in 2023, while 2nm capacity is expected to grow at a compound annual rate of 70% from 2026 to 2028.