ASML reported fourth-quarter results showing net income growth of 27% year-over-year and gross margins of 52.8%, driven by robust demand for its EUV lithography systems. Despite these outstanding metrics and a 4.9% increase in overall revenues, some investors have taken profits, selling shares after the stock more than doubled over the past seven months. The divergence between fundamental strength and share price action highlights short-term profit taking even as the company delivers industry-leading financial results.

In Q4, ASML secured record net bookings that exceeded analyst expectations by more than 100%, reflecting surging demand from AI and memory chip manufacturers. The company now carries over a year’s worth of backlog, underpinning management’s guidance for 2026 to be another growth year. These orders are heavily weighted toward advanced EUV systems, with more than half of recent bookings linked to memory-focused applications, illustrating expanded diversification beyond logic chips.

Management projects 2026 sales in the range of €34–39 billion, building on an end-market tailwind in AI infrastructure and next-generation semiconductors. To complement operational growth, ASML unveiled a €12 billion share repurchase program running through 2028, signaling confidence in cash flow generation and long-term value creation. The buyback is expected to offset dilution from employee compensation plans and enhance returns per share over the medium term.

ASML trades at roughly 44 times forward earnings, a premium to the 32-times sector median, reflecting its monopoly in EUV lithography and dominant market share. While the rich multiple incorporates expectations for sustained high-single-digit to low-double-digit annual revenue growth, potential near-term demand variability remains—particularly due to grid capacity constraints at key foundry customers. Investors weighing entry into ASML shares should balance the company’s unparalleled technological leadership and robust order book against its elevated valuation.