A key supplier of machines for manufacturing AI chips can't keep up with demand. What about the stock?

Europe’s most valuable company, the Dutch firm ASML, which manufactures machines for printing AI chips, has warned that the equipment it plans to deliver in 2027 and 2028 will not be enough to fully meet market demand. The influx of orders this year has been increasing quarter by quarter. ASML’s stock rose by more than 3% after the market opened in Amsterdam.

Some customers have such a clear picture of their future demand that they are already inquiring about the possibility of placing orders for 2029 and even 2030, said ASML CEO Christophe Fouquet. According to him, customers continue to raise their short- and medium-term forecasts for the company’s equipment, “primarily based on their expectations regarding the scale and duration of AI-related investments.” ASML is the world’s only company that manufactures extreme ultraviolet (EUV) lithography systems, a key tool for creating the most advanced chips, according to CNBC.

ASML’s net income more than doubled in the third quarter, rising from €2.13 billion a year earlier to €4.96 billion. Analysts had expected an average of €4.1 billion, according to LSEG data cited by CNBC. ASML’s revenue reached a record €11.66 billion but fell slightly short of the consensus estimate of €11.72 billion.

For 2026, ASML now forecasts revenue of €44–45 billion and a gross margin of about 56%. The previous forecast called for €43–45 billion and 54–56%, respectively, according to The Wall Street Journal, which notes that this is the third upward revision to the company’s guidance since the beginning of the year.

ASML is exploring ways to increase its production capacity by more than 30% by 2028, as previously reported, according to the company's press release. According to Fouquet, the company is already receiving a large number of orders for 2028.

Earlier this year, ASML’s management hinted at price increases, explaining that the chip shortage had strengthened its negotiating position, the WSJ reports. Chief Financial Officer Roger Dassen, quoted by the publication, said the company has already concluded discussions with key customers, but the price increases will not affect 2026 results. “This will begin to show up in part during 2027. You’ll start to see the full effect in 2028 and beyond,” he said.

Market participants are closely monitoring the Dutch company’s financial reports to determine how many chips are needed for AI. According to CNBC, announcements of orders spanning several years could reassure investors trying to assess the long-term outlook for demand.

According to S&P Global, the average target price for ASML shares is €2,075—37% higher than the closing price on October 13. As was the case three months ago, the analyst consensus in the WSJ summary, based on FactSet data, is a “Buy” recommendation.

This article was AI-translated and verified by a human editor