ASML (ASML) Q4 2025 earnings review
Bookings Explosion Masks Transparency Shift
ASML delivered a 'mic drop' quarter with a staggering €13.2 billion in net bookings—more than double the prior quarter—driven by €7.4 billion in EUV orders. Revenue hit a record €9.7 billion (+29% YoY), beating the top end of guidance. However, the celebration is tempered by a major governance shift: ASML will cease reporting quarterly bookings after 2025, arguing the metric's 'lumpiness' distorts the narrative. While FY26 revenue guidance of €34-39 billion suggests continued growth (4-19%), the removal of the most closely watched leading indicator introduces a new layer of opacity for investors.
🐂 Bull Case
EUV bookings hit €7.4 billion in Q4, signaling that the pause in leading-edge capacity expansion is over. FY25 EUV revenue grew 39% to €11.6 billion, and High-NA adoption is gaining traction with customer acceptance of the first EXE:5200B system.
The massive bookings spike validates the AI infrastructure build-out thesis. Logic (44% of bookings) and Memory (56%) are both firing, driven by HBM and advanced node demand.
🐻 Bear Case
The decision to stop reporting quarterly bookings removes the primary gauge investors use to track the semi-cycle. While management blames 'lumpiness,' this reduction in transparency often correlates with anticipated volatility or slowing momentum.
China sales normalized to 27% in Q4 (down from >40% peaks) and are guided to 'low 20s' percentages in 2026. This creates a revenue hole that must be filled by growth in other regions.
⚖️ Verdict: 🟢
Bullish. The operational numbers are spectacular, with bookings confirming a robust 2026 pipeline. However, the removal of quarterly bookings reporting prevents a perfect score, as it introduces unnecessary valuation risk.
Key Themes
Transparency Reduction: No More Quarterly Bookings
In a surprise move, management announced they will stop reporting quarterly net bookings after 2025. They argue the metric causes 'unhelpful market volatility' due to lumpiness. Investors will now only receive annual backlog updates. This significantly reduces the ability to track real-time demand shifts in the semiconductor cycle.
AI Driving Massive Bookings Spike
Accelerating. Q4 Net Bookings surged 144% QoQ to €13.2 billion. This was driven by AI demand for both Logic (advanced nodes) and Memory (HBM). Specifically, Memory bookings accounted for 56% of the total, reflecting the desperate race for HBM capacity.
China Normalization Confirmed
Decelerating. Sales to China dropped to 27% of system revenue in Q4, down from 42% in Q2. Management guides this to stabilize in the 'low 20s' percentage range for 2026. The massive backlog of older DUV tools for China has been largely worked through, turning a tailwind into a headwind.
High-NA EUV Transition
ASML recognized revenue for two High-NA systems in Q4 and shipped a third. Customer feedback on the first units (10k+ wafers run) is 'very positive.' This validates the technology roadmap for the next decade, moving High-NA from a science project to a revenue generator.
Geopolitical & Tariff Uncertainty
Management reiterated risks regarding export controls and potential new tariffs. The lower end of FY26 guidance (€34B) explicitly accounts for potential geopolitical events or customer pushouts. This remains a 'wildcard' that could cap upside.
Other KPIs
Accelerating. Up 39% YoY. EUV now represents the clear growth engine as DUV sales declined 6% YoY. The mix shift toward EUV is accretive to the long-term story but increases reliance on a handful of leading-edge customers.
Stable. Landed within the 51-53% guidance range. While strong, margins are not expanding significantly despite record revenue, likely due to the mix of lower-margin initial High-NA systems and the drop in high-margin mature DUV sales to China.
Stable. Up slightly from €2.0B in Q3. This recurring revenue stream provides a floor during cyclical downturns, though growth here is less explosive than system sales.
Guidance
Decelerating. Sequential decline from Q4's €9.7B record, which is typical seasonality. However, the midpoint (€8.55B) represents ~11% YoY growth vs 25Q1 (€7.7B). Gross margin guided at 51-53%.
Accelerating. Midpoint (€36.5B) implies ~12% growth over FY25's €32.7B. The range is wider than usual (€5B spread), reflecting the 'elevated uncertainty' regarding tariffs and customer timing. Gross margin remains sticky at 51-53%.
Key Questions
Rationale for Transparency Reduction
You cite 'lumpiness' as the reason for stopping quarterly bookings reports, but this metric is the primary tool investors use to gauge the cycle. Why make this change now, immediately following a record bookings quarter?
China 'Low 20s' Floor
You guide China to 'low 20s' percent of sales in 2026. Is this a hard floor based on non-sanctioned legacy demand, or could further export controls push this into the teens?
High-NA Margin Drag
With High-NA shipments ramping in 2026, what is the headwind to gross margins compared to mature Low-NA EUV tools, and when does High-NA become margin accretive?
Memory Sustainability
Memory bookings were 56% of the Q4 total. Is this a one-time HBM capacity fill, or do you see this level of memory intensity sustaining throughout 2026?