ASML reported a 5% year-over-year increase in fourth-quarter revenues, driven by heightened demand for its extreme ultraviolet (EUV) lithography systems. Total net sales for Q4 reached €9.7 billion, bringing full-year 2025 sales to €32.7 billion, up from €28.3 billion in 2024. The company’s installed-base management segment also grew, contributing €2.1 billion in Q4 service and field-option revenues, reinforcing ASML’s role as a critical long-term partner to leading chipmakers.

In Q4, net bookings jumped to €13.2 billion, more than double consensus expectations and lifting ASML’s order backlog to €38.8 billion. Of these bookings, €7.4 billion related to EUV systems, underscoring sustained strategic investments by memory-chip producers and logic foundries. Management noted that customer capacity plans have been revised upward, reflecting confidence in AI-driven chip demand through at least 2027.

ASML’s gross margin improved to 52.2% in the quarter and averaged 52.8% for the full year, a modest gain over 2024 levels. However, elevated R&D spending of approximately €1.2 billion in Q1 guidance and higher SG&A costs constrained operating leverage, resulting in 7% growth in net income to €9.6 billion for the year. The company plans to streamline its technology and IT organizations—cutting around 1,700 roles, or 4% of its workforce—to sharpen focus on core engineering and innovation.

Following the earnings release, ASML shares traded at a forward valuation that assumes very high free-cash-flow growth over the next several years. While management expects 2026 net sales between €34 billion and €39 billion and a gross margin of 51%–53%, investors are paying a premium multiple today. The new €12 billion share buyback program, to be executed through 2028, offsets dilution from employee plans but does little to reduce the shares outstanding in the near term. At current levels, returns will depend on the company delivering on its ambitious R&D roadmap and converting its substantial backlog into profitable shipments.