ASML Q1 results were broadly in line with expectations, and the upgraded 2026 guidance adds momentum

Overview

This report is UBS's quick take on ASML's Q1 2026 results. It says the company's quarterly performance was broadly in line with expectations, but the revenue mix and full-year guidance point to strengthening momentum. Q1 EBIT was 4% above consensus, while the midpoint of Q2 EBIT guidance is 4% below consensus. The company raised 2026 revenue guidance to €36-€40bn, and UBS expects this to lift market consensus EBIT for 2026 by a low single-digit percentage.

Core views

The core view is: first, Q1 earnings quality was solid, with strong EUV sales and gross margin better than expected; second, China system sales declined but were still in line with import data, and the company expects China sales mix to normalize to around 20%; third, improvement in the non-EUV business, especially immersion lithography demand, is the main source of the upgraded 2026 guidance; fourth, ASML plans to have capacity for at least 60 low NA EUV systems by 2026 and at least 80 by 2027, which should ease market concerns about lithography capacity bottlenecks; fifth, the near-term share price reaction may be mild.

Analysis framework

The report analyzes performance versus consensus, changes in company guidance, demand shifts by business line, trends in China sales, EUV capacity plans, and valuation methodology, while combining the 12-month rating, target price, and expected total return to assess the investment implications.

Methodology notes

• Valuation methodDCF

  Discounted cash flow valuation

  UBS says its valuation for ASML is based on the DCF method, using a 9% WACC and a 3% terminal growth rate.

• Earnings comparisonConsensus comparison

  Comparison of actual results with market consensus

  The report focuses on how Q1 net sales, EUV sales, gross margin, EBIT, and Q2 guidance compare with consensus in order to judge earnings quality and potential earnings upgrades.

• Rating frameworkForecast Stock Return

  Forecast stock return

  UBS defines forecast stock return as the expected share price appreciation over the next 12 months plus dividend yield; this report shows 16.8% expected price appreciation, 0.7% dividend yield, and 17.5% expected total return.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML HOLDING NV

  Core coverage name

  Strengths

  A global leader in semiconductor lithography equipment, with strong EUV sales, better-than-expected Q1 gross margin, raised 2026 revenue guidance, and customer exposure to major semiconductor manufacturers such as Samsung, TSMC, Intel, and Hynix.

  Weaknesses

  The midpoint of Q2 EBIT guidance is below consensus, China system sales declined both year on year and sequentially in Q1, and the business is highly exposed to the semiconductor capex cycle.

  Comparison

  Competition mainly comes from Nikon and Canon, but ASML has a leading position in advanced-node lithography; the report says only a few competitors can compete with it at leading-edge nodes.

  Risks

  Macroeconomic slowdown, weaker semiconductor end markets, customer capex cuts or delayed orders, and execution risk on next-generation EUV technology.

Key data

• 12-month ratingBuyUBS's 12-month rating on ASML is Buy.
• 12-month target price€1,500.00The report discloses a target price of €1,500.00.
• Current price€1,284.20Price date is 2026-04-14.
• Expected share price upside16.8%From the report's disclosed forecast price appreciation.
• Expected total return17.5%Composed of 16.8% forecast price appreciation and 0.7% forecast dividend yield.
• Q1 2026 net sales€8.8bn1% above consensus.
• Q1 2026 EUV system sales€4.1bnUp 29% year on year and 30% above consensus.
• Q1 2026 gross margin53%Above the 52.2% consensus.
• Q1 EBIT deviation+4% vs consensusBetter-than-expected gross margin drove Q1 EBIT above consensus.
• Q2 2026 revenue guidance€8.4-€9.0bnThe company's guidance range for Q2 net sales.
• Q2 2026 gross margin guidance51%-52%Using the midpoint of guidance, Q2 EBIT is about 4% below consensus.
• 2026 revenue guidance€36-€40bnRaised from the previous €34-€39bn.
• China system sales as a share of Q1 product sales19%Q1 China system sales fell 56% sequentially and 23% year on year.
• EUV capacity targetAt least 60 low NA EUV systems in 2026; at least 80 in 2027The company's capacity plan should help ease concerns about lithography bottlenecks.

Impact & implications

The main investment implication is that ASML has delivered positive signals on EUV, gross margin, and full-year revenue guidance, which may support upward revisions to 2026 earnings expectations and the Buy rating case. However, because the midpoint of Q2 EBIT guidance is below consensus and the Q1 result was viewed as broadly in line with buy-side expectations, the short-term share price reaction may be limited. Over the medium term, improving non-EUV demand, a recovery in immersion lithography sales, and EUV capacity expansion are the key drivers of future earnings upside.

Risks

• Deteriorating macro conditions could lead to cuts in semiconductor capital equipment spending.
• A slowdown in semiconductor end markets could cause customer order deferrals or delays.
• ASML's customers operate cyclically, so the company's results may be highly volatile.
• Next-generation EUV technology carries execution risk.
• The midpoint of Q2 2026 EBIT guidance is below consensus, which may limit the near-term share price reaction.
• China system sales have weakened, and the path to normalization in China demand still needs to be monitored.

What to watch

• Whether the 2026 revenue guidance of €36-€40bn can be achieved.
• Whether non-EUV business and immersion lithography demand continue to improve.
• Whether Q2 2026 net sales and gross margin come in within the guided range.
• Whether China sales mix normalizes to around 20% as the company expects.
• Whether low NA EUV capacity reaches at least 60 systems in 2026 and at least 80 in 2027.
• Whether market consensus EBIT for 2026 is revised up by a low single-digit percentage.