ASML Posts Blockbuster Q2 Numbers and Raises Guidance. ASML Stock Still Has Room to Run.

ASML (ASML), the artificial intelligence (AI) infrastructure company known for its monopoly in extreme ultraviolet lithography (EUV) systems, just reported another set of upbeat numbers for its latest quarter. Not only did ASML report a beat on both revenue and earnings, but it also raised its revenue and gross margin guidance as the unprecedented demand for memory becomes a new point of growth for the company.

Right now, the cause of all the excitement around ASML stock is due to its print for the second quarter of fiscal 2026. Could ASML be a wise investment option for the long term at current levels? Let's take a closer look.

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Based in the Netherlands and founded in 1984 as a joint venture between Philips and ASM International, ASML builds the photolithography machines that chipmakers use to print microscopic circuit patterns onto silicon wafers. In fact, ASML holds a near-monopoly in EUV lithography, the technology required to manufacture the world's most advanced chips at leading-edge process nodes.

Valued at a market capitalization of about $702 billion, ASML stock is already up 66% so far this year. Meanwhile, the stock also offers a dividend yield of 0.59%, with dividends growing consecutively for years. With a payout ratio of 23.85%, further headroom for growth remains.

ASML's recent Q2 results ticked all the boxes that an investor base craves. The period was marked by revenue and earnings growth, along with raised sales and gross margin guidance for the year.

ASML reported revenue of €9.3 billion in Q2, up 21% year-over-year (YOY). Net system sales, the core revenue segment of the company that includes the sale of EUV machines, rose more than 17% to €6.6 billion, while service and field options sales came to €2.8 billion. Gross margins improved to 54% from 53.7%.

Earnings, meanwhile, moved higher by 28% YOY to €7.58 per share. This was higher than the consensus estimate of €6.80 per share, making this the second consecutive quarter of an earnings beat from the company.

For the full year, ASML again raised its guidance, with revenue expected to be between €43 billion and €45 billion. Full-year gross margin estimates were also raised to a range of 54% to 56%.

Net cash from operating activities rose to €1.7 billion in Q2 2026, from €747.7 million in Q2 2025. Overall, ASML ended the quarter with a cash balance of €6.7 billion, with no short-term debt on its books and a long-term debt balance at a much lower level of €1.9 billion.

However, despite the company's consistent showing in terms of results, ASML stock still trades at overvalued levels. Its forward price-to-earnings (P/E) ratio, price-to-sales (P/S) multiple, and price-to-cash flow (P/CF) multiple of 49.5 times, 19.3 times, and 59.3 times are all above the respective sector medians.

Before this year, from about mid-2024 to mid-2025, ASML was having a hard time. ASML stock had dwindled, and earnings growth was relatively slower. What changed in 2026? Well, other than demand for memory chips skyrocketing, nothing else really. Demand for AI chips continues to be strong, and ASML continues to remain the only company making EUV machines.

Why are these machines so important to the point that ASML's customer base is populated with venerable AI industry names like Taiwan Semiconductor (TSM), Samsung, Intel (INTC), Micron (MU), SK Hynix (SKHYV), Kioxia (KXIAY), and many other semiconductor manufacturers? For companies that want to build leading-edge logic at 3 nanometers and below or the densest DRAM, there is essentially no alternative EUV machine maker. ASML holds a 100% share of the EUV market, and each machine can cost in the hundreds of millions of dollars, containing more than 100,000 parts that must work in concert at the most precise levels.

This is understandably hard to replicate. ASML spent decades and billions of dollars in research building both its machines and the ecosystem around them. An upstart would need to replicate not just the machines but ASML's entire web of specialist vendors, accumulated patents, and field experience.

Yet, ASML is not resting on its laurels. High NA EUV is shaping up as ASML's next big lever, and the machine behind it is the TWINSCAN EXE platform. The name refers to a higher numerical aperture, which in plain terms means the optics help resolve even finer features than standard EUV. That extra resolution lets chipmakers print smaller, denser patterns in a single exposure, which cuts steps, reduces defects, and improves yield on the most demanding layers. Each of these systems carries a price tag of around $380 million, well above the roughly $200 million of a standard EUV machine, so every unit sold lifts revenue meaningfully.