ASML Shows Signs of Acceleration as AI Demand Fuels Chip Equipment Orders

The semiconductor landscape is shifting rapidly, and ASML is at the center of this acceleration. The Dutch equipment manufacturer reported its strongest booking performance in years, signaling that the chip cycle is gaining momentum. The surge in orders, driven predominantly by AI-related capacity expansion, suggests that the company’s 2026 revenue growth trajectory could be more compelling than initially expected.

The Bookings Surge That Started the Acceleration

ASML’s fourth-quarter results presented a compelling contrast between headline revenue and forward-looking indicators. While quarterly revenue grew modestly to 7.58 billion euros (up 6.6% year-over-year), the real story emerged in the company’s order book: bookings nearly doubled to 13.2 billion euros compared to the same quarter a year earlier. Over the full year, bookings climbed 48% to 28 billion euros, a dramatic shift from the tepid demand environment that dominated much of 2024.

CEO Christophe Fouquet attributed this turning point to customer urgency, noting that capacity expansion planning has accelerated “across a large majority of our customer base.” This broad-based demand acceleration contrasts with previous cycles that saw pockets of strength rather than industry-wide buildouts. The magnitude of the order increase suggests that chipmakers are betting heavily on sustained AI infrastructure investments.

Market reaction, however, proved mixed. Although the stock jumped approximately 5% in premarket trading on the announcement, it retreated once regular session trading began—a pattern often associated with concerns about current valuations relative to forward growth prospects.

EUV’s Expanding Role in the Acceleration Cycle

ASML’s moat in the semiconductor equipment market rests on its exclusive position as the sole manufacturer of extreme ultraviolet (EUV) lithography machines, which enable production of the most advanced chips required for AI applications. The increasing criticality of this technology is reflected in its growing sales mix: EUV systems represented 48% of total systems sales in 2025, up from 38% in 2024.

This upward trajectory is unlikely to reverse. As chipmakers race to deploy next-generation AI processors, demand for EUV capacity has become the bottleneck constraining industry growth. With ASML selling roughly 100 such machines per quarter—each priced at hundreds of millions of dollars—the company operates on a different demand cycle than the broader semiconductor industry. The current acceleration in orders suggests that this backlog could sustain revenue growth well into the coming years.

Timing the Conversion from Orders to Revenue

The company issued 2026 revenue guidance of 34 billion to 39 billion euros, implying approximately 14.7% growth at the midpoint. While this may appear modest given the bookings acceleration, it reflects the company’s typical conversion timeline: orders generally take 12 to 18 months to convert into revenue as the machines are manufactured and deployed at customer facilities.

This lag creates an interesting dynamic for investors. If the surge in fourth-quarter bookings extends into early 2026—which early signals suggest it might—the company could achieve the higher end of its guidance range or potentially exceed it in 2027. The current stock pullback, despite improving fundamentals, may be attributable to investors pricing in a lag between the order acceleration and its revenue manifestation.

The Investment Outlook Amid Industry Acceleration

Several factors support a constructive view on ASML’s prospects. The company’s technological monopoly in EUV equipment means that every dollar spent by chipmakers on advanced capacity expansion flows through ASML’s order book. The AI buildout, which is expected to remain a primary capex driver for the industry through this decade, provides a structural tailwind.

That said, valuation concerns warrant acknowledgment. The stock has doubled over the past six months on improving sentiment around the chip cycle. Much of the good news regarding the acceleration in demand is already reflected in the stock price, limiting near-term upside unless the company continues to surprise on the magnitude and durability of orders.

Looking Ahead: The Acceleration Potential

ASML also announced workforce adjustments, cutting roughly 1,700 positions to focus resources on engineering and product innovation. While typically associated with cost pressures, the company’s messaging framed this as a strategic realignment to capture opportunities from accelerating customer demand—a more positive lens than pure cost-cutting.

For investors evaluating ASML, the central question is whether the current acceleration in AI-driven chip capacity expansion represents a multi-year structural trend or a cyclical uptick. The breadth of booking strength across the customer base, combined with the mounting criticality of advanced chip production for AI, leans toward the former interpretation. If ASML can maintain strong order momentum through 2026, the stock’s current valuation may prove justified despite recent gains. However, those entering at current prices should be comfortable with a measured approach, allowing the company to convert its record backlog into realized revenues before drawing firm conclusions about the company’s next leg of growth.