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ASML (ASML) is moving higher after reporting its Q3 results this morning. The semiconductor equipment giant, a focal point of the ongoing AI-driven capex boom, delivered a more modest EPS beat than in previous quarters, while revenue edged up just 0.7% yr/yr to €7.52 bln, missing expectations. Encouragingly, the midpoint of ASML's Q4 revenue outlook of €9.2-9.8 bln sits well above consensus, and management reaffirmed its FY25 revenue growth target of roughly 15% to about €32.5 bln.

• Management noted improved visibility this quarter from Q2, citing ongoing AI infrastructure investments and broader customer momentum across both logic and advanced DRAM, along with continued adoption of more EUV layers that boost lithography intensity.
• On the other hand, it expects China customer demand and sales to significantly decline in 2026 compared to 2024 and 2025.
• Net system sales were driven by logic (65%) and memory (35%), with logic orders supported by leading-edge node transitions and memory strength tied to advanced DRAM and HBM demand.
• Bookings totaled €5.4 bln, split 53% logic and 47% memory, including €3.6 bln in EUV systems as customers continue migrating from multi-patterning to single EUV exposure.
• Gross margin of 51.6% was strong and helped drive the EPS beat despite the revenue miss; ASML expects margins of 51-53% in Q4 and around 52% for FY25.
• Shipped its first 3D packaging lithography tool (XT:260) and highlighted progress with its high-NA EUV platform.

Briefing.com Analyst Insight

This was a good quarter for ASML and a nice bounce back from Q2 after signaling customer hesitation and uncertainty. The tone was notably more upbeat, with management pointing to steady progress in AI-related logic and DRAM buildouts and an ongoing shift toward higher EUV layer adoption. The risk remains geopolitical, with China sales expected to be significantly lower in 2026, though the strong Q4 guide and reaffirmed FY25 outlook suggest a solid finish to the year. The expectation that FY26 will not fall below FY25 also points to a more stable demand environment heading into the next cycle.