ASML, the Dutch company that makes the machines needed to build the world's most advanced computer chips, just delivered a quarter that says one thing loud and clear: the AI boom is real, and it's spending.

The company reported second-quarter results on Wednesday that beat Wall Street expectations, and it raised its full-year 2026 outlook. The reason? Customers like Tesla and Apple are pouring money into artificial intelligence, and that means they need more advanced chips—which means they need ASML's lithography systems.

Strong Q2 Results Beat Expectations

ASML reported earnings of $8.82 per share, easily topping the consensus estimate of $7.98. Revenue came in at $10.84 billion, also ahead of the $10.28 billion analysts were looking for.

In euros, the company posted net sales of 9.33 billion euros, up from 8.77 billion euros in the first quarter. Net income rose to 2.92 billion euros, or 7.59 euros per share, from 2.76 billion euros, or 7.15 euros per share, in the prior quarter. Gross margin improved to 54.0% from 53.0%.

ASML sold 86 new lithography systems during the quarter, up from 67 in the first quarter. Its Installed Base Management business—which includes maintenance and upgrades for existing machines—also grew, with sales increasing to 2.76 billion euros from 2.49 billion euros.

AI Demand Drives Customer Spending

“Our second-quarter total net sales were €9.3 billion and gross margin came in at 54.0%, both above guidance, driven primarily by higher than expected Installed Base Management sales,” CEO Christophe Fouquet said.

He added that ongoing AI investments and continued advances in AI technologies are boosting demand for advanced logic and memory chips, prompting customers to accelerate capacity expansion plans.

The company said strong customer commitments across its product portfolio have improved visibility into long-term demand. Based on that momentum, ASML plans to increase its 2027 low-NA EUV and DUV immersion production capacity by about 30%, while evaluating another 30% expansion in 2028.

Outlook Raised as Demand Strengthens

For the third quarter, ASML expects revenue of between 11 billion euros and 12 billion euros, with a gross margin of 55% to 57%. It also forecasts research and development expenses of about 1.2 billion euros and selling, general and administrative costs of about 400 million euros.

The company raised its full-year 2026 outlook and now expects net sales of between 43 billion euros and 45 billion euros, with a gross margin of 54% to 56%, up from its previous guidance.

Despite facing tightening U.S. export restrictions—including a proposed bipartisan bill to block Deep Ultraviolet (DUV) machine sales—ASML expects China to remain a key market, accounting for roughly 20% of its total net sales this year, according to CNBC.

Chief Financial Officer Roger Dassen said demand in China remains broadly in line with global market trends. Meanwhile, Morningstar cautioned that the stock appears fully valued, even as past export curbs have supported short-term demand.

The company will update its long-term strategy at its Capital Markets Day on June 10 next year.

Intel Reaches High NA EUV Production Milestone

Separately, ASML said Intel Corporation (INTC) Foundry has begun high-volume manufacturing of a subset of Intel Core Ultra Series 3 “Panther Lake” processors using ASML’s High NA EUV technology on Intel 18A process layers.

The milestone marks the first shipment of a high-volume logic product manufactured with High NA EUV technology, according to the companies.

Stock Moves Higher After Results

ASML shares were up 4.58% at $1857.02 during premarket trading on Wednesday, according to market data.