Beat now, squint later
ASML turned in a strong Q1, topping estimates on both revenue and profit. The company posted €8.8 billion in revenue and €7.15 in earnings per share, which is the kind of quarter that usually gets a fist pump — until management walks up to the mic and says Q2 will be softer than Wall Street wanted.
The catch: Q2 is doing the awkward shuffle
The company’s midpoint revenue guide for Q2 came in at €8.7 billion, below the €9.1 billion consensus. Gross margin is also expected to ease to 51.5%, so investors are left doing the usual semiconductor-equipment dance: strong demand today, a slightly foggier bridge to tomorrow.
Why RBC is still leaning in
RBC Capital Markets analyst Srini Pajjuri kept an Outperform rating and bumped his price target from $1,625 to $1,700. His thesis is basically: don’t get distracted by the near-term wobble when EUV demand is still outrunning supply, memory is unusually strong, and AI spending is keeping the runway long.
Management also raised its 2026 revenue outlook to €36 billion-€40 billion from €34 billion-€39 billion, and it sees EUV tool output climbing to 60 in 2026 and more than 80 in 2027. That’s the kind of setup that has bulls thinking the real upside story may not be this quarter — it may be the one after everyone stops arguing about this quarter.
Big picture: ASML is still the toll booth for the chip industry’s most advanced gear. The stock may sulk on a softer Q2, but the longer-term demand math is still doing backflips.