ASML just reported Q3 2026 earnings, and management delivered a major update: the company cannot fully meet customer demand for the next two years. With net sales hitting €11.66 billion—up 55% year over year—these results reshape the trajectory for the entire wafer fab equipment (WFE) industry.
In this episode, we break down the quarterly print and what extended capacity constraints mean for semi equipment through 2028:
End-Market Shift: How memory chipmakers and installed base management offset softer logic spending to drive the top-line surge.
Profitability & Cash: Net income near €5 billion (including ~€500M from ASML’s Mistral AI stake) and the rebound in free cash flow after several lumpy quarters.
Q4 2026 Guidance: The setup for ~52% revenue growth and record gross margins near 57%.
Revisiting Our 2028 Call: Why our earlier thesis on a potential 2028 equipment slowdown looks completely different now that ASML is weighing expansion beyond its planned 30% capacity bump.
The Fab Five & Sector Strategy: What this supply crunch signals for Applied Materials, Lam Research, KLA, and Tokyo Electron following the post-June sell-off—and why macro equipment allocation matters more than single-stock picking at this stage of the AI cycle.
Timestamps:
0:00 ASML Kicks Off Chip Earnings Season
1:10 The EUV Moat: Why Lithography Is a Choke Point
3:00 Sales by End Market: Memory Picks Up the Slack
4:10 Q3 2026 Revenue: +55% and the Lumpy Sales Cycle
6:00 Net Income, the Mistral AI Gain & Free Cash Flow
7:30 Revisiting Our 2028 Slowdown Call
8:10 Q4 Guide: +52% Growth and Record ~57% Margins
9:00 Capacity Constrained Through 2028: Why It’s Bullish
11:10 Fab Five Sell-Off: Is Equipment on Sale?
12:00 Allocation Over Stock Picking: Our Takeaway
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Content in this episode is for general information or entertainment only and is not specific or individual investment advice. Forecasts and information presented may not develop as predicted and there is no guarantee any strategies presented will be successful. All investing involves risk, and you could lose some or all of your principal. Chip Stock Investor owns shares of ASML.