The AI boom is broadening.
Much like Intel has been a turnaround winner on the market over the last six months, ASML (ASML 1.93%) has also caught investors' eyes, becoming the latest semiconductor stock to bounce back after lagging behind.
ASML is the world's only maker of extreme ultraviolet (EUV) lithography machines, which make the most advanced chips. These are highly complex, very expensive machines, and because ASML only sells around 100 of them each quarter, the stock is highly sensitive to the demand cycle, which operates at a different cadence from semiconductor demand.
Coming into the fourth quarter report, ASML had mostly reported middling results in recent quarters, showing slow bookings growth. However, the stock doubled over the last six months on signs that the semicap, or semiconductor cycle is turning, and, indeed, its bookings soared in the fourth quarter.
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What we learned from ASML's fourth quarter
Investors didn't seem to know what to make of ASML's latest update. The stock jumped in pre-market hours, trading up around 5%, but quickly turned negative once the regular session began, perhaps a reflection of valuation concerns.
ASML's revenue rose 6.6% in the quarter to 7.58 billion euros, and earnings per share was up 7.3% to 7.34.
However, investors seemed more impressed with the direction of the business as it recorded 13.2 billion euros in bookings in the quarter, more than double from the quarter a year ago, and bookings for the year rose 48% to 28 billion euros, a bullish sign for future growth.
CEO Christophe Fouquet said, "Over the past quarters, we have seen a notable increase and acceleration of capacity expansion planning across a large majority of our customer base."
ASML's guidance for 2026 called for modest growth as it typically takes the company 12 to 18 months to convert bookings into revenue, once its machines are deployed. The company sees revenue of 34 billion-39 billion euros for 2026, implying 14.7% growth at the midpoint.
ASML also announced plans to cut 1,700 jobs to streamline the business and focus on engineering and innovation.
NASDAQ: ASML
Key Data Points
Is ASML a buy?
Given that ASML is the only maker of EUV equipment, it's hard to overlook its central position in the semiconductor industry and the emerging tailwind from AI.
EUV sales as a percentage of systems went from 38% in 2024 to 48% in 2025, and that percentage should continue to grow this year.
While the stock is certainly more expensive than it was six months ago, the outlook for AI is getting brighter. If the surge in bookings in the fourth quarter continues into 2026, we should see the stock climb, especially as AI demand is expected to keep growing in the coming years.
