Giant chip equipment maker ASML reported record orders in the fourth quarter on Wednesday and boosted its 2026 outlook as demand surged from AI chipmakers including Nvidia, even as it cut management jobs to focus on engineering.

CLOSEST-WATCHED METRIC

The Dutch firm's orders exceeded expectations as the global chip market ramps up production capacity for the roll-out of AI and data centers, with demand rising for the precision machines ASML makes that dominate the process for printing AI chips.

ASML's fourth-quarter orders, the closest-watched metric in the industry, leapt to a record 13.2 billion euros ($15.8 billion), from 7.1 billion euros a year ago. The bookings beat Visible Alpha analyst forecasts of 6.32 billion euros.

CEO Christophe Fouquet said production-capacity hikes at clients from Taiwan's TSMC to Samsung and Micron were feeding through to orders.

"Micron has been announcing a groundbreaking almost every week for the last few weeks. There, you have a direct translation basically into shipments for us," he said.

ASML also announced 1,700 job cuts, some 3.8% of staff, reining in bureaucracy amid a broader plan over the next months to shed 3,000 management positions and hire engineers in a focus on innovation.

"We want to really boost, again, our engineering capability, our innovation engine," Fouquet said. "Our engineers told us that a lot of the time they spend is no longer on innovation, because the organisation has become so complex."

Shares of ASML, Europe's largest company by market capitalisation, were up 6% at midday after earlier jumping as much as 7.5%. The stock has risen around 40% this year so far.

ASML dominates Europe's most valuable companies

‘GOING OUT WITH A BANG’

Despite being the most-watched industry metric, ASML plans to discontinue revealing quarterly orders data, arguing it causes unnecessary volatility in shares.

"It will be the last time that ASML reports quarterly order intake and the company is going out with a bang," ING analyst Marc Hesselink said.

Citing AI-related demand, ASML raised its 2026 sales guidance to 34 billion to 39 billion euros, above analyst estimates of 35 billion euros, LSEG data showed. It previously forecast flat-to-higher sales than 32.7 billion euros in 2025.

Net profit in 2025, at the sole maker of the Extreme Ultraviolet (EUV) lithography machines used to print the world's most advanced chips, jumped 26.3% to 9.6 billion euros, from 7.6 billion euros a year earlier, on annual sales of 32.7 billion, up 15.5% from a year earlier.

ASML revenue grew from 4.5 billion euros in 2010, to 32.7 billion euros in 2025

ASML customers TSMC, Samsung, and Micron are boosting investment plans amid demand for AI logic and memory chips needed by tech giants such as Microsoft, Amazon, and Alphabet's Google.

"Overall there is good fourth-quarter orders and 2026 outlook, driven by AI demand for EUV in both logic and DRAM," or memory chips, Mizuho analyst Kevin Wang said in an email.

ASML also said it would buy back 12 billion euros worth of shares through 2028.

Despite ASML's earlier forecasts showing Chinese sales falling to 20% of system sales, Chinese sales remained level at 27% in Q2

LOOKING TO 2030

ASML kept longer-term guidance to 2030 untouched, CEO Fouquet said, anticipating revenue of between 44 and 60 billion euros and a gross margin of 56% to 60% in 2030.

China, the world's largest buyer of chipmaking equipment, remained ASML's single-largest market in 2025, representing 33% of sales, though that figure has dropped from 41% in 2024. Dassen forecast it would fall further to 20% in 2026.

U.S.-led export restrictions prevent Chinese chipmakers from buying ASML's most advanced EUV tools and Nvidia's best chips.

($1 = 0.8339 euros)