ASML to Report Earnings as Semiconductor Bulls Watch on

ASML Holding NV (NASDAQ:ASML), a linchpin of the global semiconductor industry, is poised to release its third-quarter earnings report tomorrow before the market opens, and markets will be watching. The report arrives at a crucial point, with many questioning just how bubbly the AI sector is at the moment.

The markets are holding their breath, eager to glean insights into ASML’s performance and future outlook, with new deals announced by key customers such as TSMC, and SK Hynix expected to have a positive impact on ASML.

Analysts are projecting earnings per share (EPS) of $5.38, a slight increase from $5.28 a year ago, reflecting 1.9% year-over-year growth. Revenue is projected to reach $7.74 billion, representing a 3.6% increase compared to the same quarter last year. These figures underscore the continued importance of ASML in the global tech supply chain.

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Recent developments at ASML have also captured market attention. The appointment of Marco Pieters, a 25-year company veteran, as the new Chief Technology Officer (CTO) is seen as a positive move. Pieters' extensive experience with ASML's “Holistic Lithography” program positions him well to lead the company's technological advancements. His predecessor, Martin van der Brink, retired in April 2024.

The departure of Bruno Le Maire, France's former finance minister, from his role as a special advisor to ASML's executive board, adds another layer of complexity. Le Maire's focus on enhancing Europe's semiconductor ecosystem was viewed as strategically important. His exit, coinciding with political shifts in France, raises questions about the future direction of ASML's European strategy.

ASML's annual report highlighted the impact of export controls, particularly those led by the U.S., on customer demand in 2024. Major customers, including TSMC, Samsung, SK Hynix, SMIC, and Intel, exhibited caution in capital expenditures due to concerns over technological sovereignty and macroeconomic conditions. ASML anticipates a decline in sales to China, which accounted for 36% of its sales in 2024, to around 20% in 2025. This shift underscores the geopolitical risks facing the company.

Despite these challenges, ASML reported a significant increase in fourth-quarter 2024 bookings, totaling €7.09 billion, driven by heightened demand for advanced equipment amid the AI boom. This figure substantially exceeded analysts' expectations and led to an 11% rise in ASML's share price at the time. CEO Christophe Fouquet attributed this growth to the rising prominence of artificial intelligence, suggesting a strong demand driver for ASML's products.

The second quarter earnings report showed net sales of €7.7 billion, surpassing expectations. However, the company expressed uncertainty about growth in 2026, citing macroeconomic and geopolitical challenges, particularly related to tariffs. This cautious outlook led to a significant drop in ASML's stock price following the announcement, a reminder of the market's sensitivity to ASML's guidance.

While the consensus points to continued growth driven by the AI boom, a closer examination reveals potential vulnerabilities. ASML's reliance on a handful of major customers exposes it to significant risk if any of these companies experience a downturn or shift their capital expenditure plans. The assumption that the AI boom will indefinitely fuel demand may be overly optimistic. History is littered with examples of bubbles that burst, leaving suppliers overextended, and whilst this may not be imminent, there are questions being asked, and more by the day it seems.

ASML's upcoming earnings report is a pivotal event. The company's performance and guidance will provide valuable insights into the health of the semiconductor industry and the broader tech landscape. While the AI boom presents a significant opportunity, uncertainties remain.