ASML’s Growth Trajectory Faces Headwinds Despite Strong 2025 Performance

Investors in Dutch chip equipment manufacturer ASML are experiencing conflicting sentiments as the company navigates between present success and future uncertainty. While ASML continues to deliver impressive financial results through 2025, emerging concerns about 2026 are casting shadows over the company’s growth narrative, with market analysts particularly focused on potential challenges in the Chinese market.

Robust Financial Performance Continues

ASML’s third-quarter 2025 results demonstrated sustained strength, with the company reporting net revenue of €7.5 billion and net profit reaching €2.1 billion, meeting internal expectations. The company maintained a healthy gross margin of 51.6% during this period.

Looking ahead, management anticipates an even stronger finish to the year, projecting fourth-quarter net revenue between €9.2 billion and €9.8 billion—representing substantial sequential growth. For the full 2025 fiscal year, ASML expects revenue growth of approximately 15% compared to the previous year.

Shareholder Returns Remain Generous

Despite emerging concerns about future growth, ASML continues to reward its investors through capital return programs. The company will distribute an interim dividend of €1.60 per share on November 6. Additionally, during the third quarter, ASML repurchased €148 million worth of its own shares.

However, the company has indicated it will not fully utilize its current €12 billion share buyback program, signaling a more cautious approach to capital allocation. A new repurchase program is scheduled for announcement in January 2026.

Should investors sell immediately? Or is it worth buying ASML?

2026 Outlook: China Concerns Cloud Growth Prospects

The company’s forward guidance reveals significant caution regarding 2026 performance. While management has assured investors that revenues will not fall below 2025 levels, they have refrained from providing clear growth projections for the coming year.

The primary concern centers on China, where ASML anticipates substantially reduced demand in 2026. This expected downturn is amplified by macroeconomic and geopolitical uncertainties that are affecting the broader semiconductor industry. What has been a developing challenge for chip manufacturers globally now appears to be impacting ASML more directly.

Strong Order Book Provides Some Reassurance

ASML’s current business pipeline remains robust, with net bookings totaling €5.4 billion in the third quarter. Notably, €3.6 billion of these bookings were for the company’s advanced EUV systems, underscoring ASML’s continued critical position within the semiconductor supply chain.

The combination of strong current performance and shareholder returns against a backdrop of 2026 uncertainty creates a complex investment proposition. Whether ASML’s technological leadership and diverse customer base can overcome these emerging challenges will become clearer as the company moves into the new year.