ASML Holding (AMS:ASML) is set to release its second-quarter results on Wednesday, July 15, with the market bracing for significant volatility. A 7% move in the stock would translate to a market capitalization change of approximately €42 billion, a figure that exceeds the midpoint of the company's 2026 sales outlook of €38 billion, according to Saxo investment and options strategist Koen Hoorelbeke.
The Dutch semiconductor equipment maker has a history of sharp earnings-day reactions, with shares jumping more than 7% in six of the last eight quarterly reports. After closing at €1,569 on Friday, down 4% over the past five days, the stock remains up 70.3% year-to-date. Its trailing price-to-earnings ratio stands at 60.7, reflecting lofty investor expectations.
Focus on Margins and Guidance
Given the current valuation, attention will likely shift from headline sales figures to the company's margin outlook and updates on customer capacity plans. ASML forecasts quarterly sales between €8.4 billion and €9.0 billion, with gross margins ranging from 51% to 52%. The midpoint of €8.7 billion would represent a 13.1% year-over-year increase from €7.692 billion but a slight decline from the €8.767 billion reported in the first quarter.
Gross margin, which measures the portion of sales left after production costs, will be a key metric. Any deviation below 51% could raise concerns about pricing power or cost pressures. Deutsche Bank Research raised its price target on ASML to €1,800 from €1,600 on Friday, maintaining a 'Buy' rating, but analyst Robert Sanders cautioned that negative risks persist, including demand fluctuations, supply chain disruptions, financing conditions, and geopolitical tensions.
No More Bookings Data
ASML will no longer report its quarterly bookings figure, which previously tracked accepted equipment orders. The company discontinued the metric, citing volatile demand and long order-to-revenue timelines that made it less useful. Instead, ASML says its forecasts derived from customer capacity discussions provide a more accurate picture. This change removes a key earnings-day catalyst and places greater emphasis on management's commentary during the investor call.
Market Context and Comparisons
The broader European tech sector slipped 1.3% on Friday, while ASML fell 2.1%, underperforming its U.S. rivals. Applied Materials (NASDAQ:AMAT) added 1.64% over the five-day period and is up 134.44% year-to-date, while Lam Research (NASDAQ:LRCX) slipped 0.04% but has climbed 104.66% since January. This left ASML trailing by 4 to 5.6 percentage points last week, despite continued investor optimism for AI-driven semiconductor demand.
Ipek Ozkardeskaya, senior market analyst at Swissquote Bank, noted that 'the large swings we're seeing in technology stocks suggest investors remain under stress amid elevated valuations.' The European tech sector fell 1.8% for the week as some investors pared back bets on AI winners and Middle East tensions dampened risk appetite.
Valuation and Risks
ASML's 2025 sales totaled €32.667 billion, and management's 2026 guidance of €36 billion to €40 billion implies growth of 10.2% to 22.4%, with a midpoint of 16.3%. The stock's 70.3% year-to-date gain is more than four times the midpoint sales growth. While this does not necessarily mean the stock is overvalued—since investors are pricing in future profits beyond 2026—it leaves little room for error. If gross margin falls below 51%, full-year guidance weakens, or customer demand softens, the stock's rich valuation could compress rapidly.
With no bookings update to distract, Wednesday's focus will center on three key areas: gross margin, the mix of system and service revenue, and any revision to the 2026 revenue range. Given ASML's recent history, the market's initial reaction could be more dramatic than the underlying accounting news.
