The Netherlands-based ASML (ASML +1.18%) saw its revenue surge 29% year over year in the fourth quarter, capping off a year when net sales rose 15% to 32.7 billion euros.
It was overall a solid earnings report for the leading manufacturer of lithography machines -- the equipment used to print semiconductor circuitry onto silicon wafers that get turned into chips. Earnings per share jumped 33% to 7.35 euros per share, but that fell short of estimates.
The stock price has leveled off a bit in recent days, perhaps on the earnings miss or on investors taking profits after a run that has seen ASML stock rise 33% already in 2026 and 99% over the past year. Its valuation is elevated at 55 times earnings, so investors might have factored that in as well.
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But the outlook for ASML remains very bright. ASML headed into 2026 with a backlog of $38.8 billion and record quarterly net bookings of 13.2 billion euros, which far exceeded analysts' estimates.
That translates, in part, to estimated net sales of between 34 billion euros and 39 billion euros for 2026, which would be up 12% at the midpoint.
One of the main growth drivers is its advanced extreme ultraviolet lithography (EUV) machines. These accounted for 7.4 billion euros of the fourth-quarter net bookings. They are used to manufacture memory chips like those made by Micron Technology, one of ASML's biggest clients, for which there is a growing demand.
Approximately 56% of the net bookings in the quarter were for memory systems, with logic systems accounting for about 44%.
"Perfect storm" for memory systems
ASML is anticipating strong growth in memory systems sales in 2026. On the earnings call, ASML Chair and CEO Christophe Fouquet said demand for high bandwidth memory and double data rate memory systems is "very strong," with supply tight through at least 2026.
NASDAQ: ASML
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Several factors are driving demand, Fouquet said. One is the demand for more capacity as data centers increase and AI-related infrastructure is built. And customers continue to adopt dynamic random access memory (DRAM) nodes with more EUV layers.
"This is a bit of what I would call the perfect storm because when it comes to EUV as a result, DRAM share most probably will increase over time," Fouquet said. "So this is a very good dynamic on DRAM, which, again, based on all the work we do with our customer discussion(s) we don't see stopping ... And we should benefit from that in the years to come."
ASML stock was trending down about 2% on Wednesday, despite the promising outlook for memory systems. This likely had to do with the high valuation, the earnings miss, and/or the roughly 1,700 job cuts ASML announced last week as part of its plan to streamline and invest more in engineering and innovation.
But the growth outlook shows that ASML's secret weapon to drive earnings in 2026 and the years beyond will be a continuing surge in memory system sales. ASML stock is certainly one to hold for the long term, and buyers should perhaps look for a dip to get in.
