Chip giant ASML stock falls amid tightening China restrictions

ASML stock fell 6% on Wednesday despite raising its sales forecast for 2026 and beating first-quarter revenue and profit expectations.

The sell-off comes as the Dutch firm faces tightening restrictions on export controls, which caused a drop in the percentage of net sales to China.

Here’s how ASML did versus LSEG consensus estimates for the first quarter:

• Net sales: 8.8 billion euros ($10.4 billion) versus 8.5 billion euros expected
• Net profit: 2.8 billion euros versus 2.5 billion euros expected

The company previously forecast that its first-quarter sales would be between 8.2 billion euros and 8.9 billion euros.

ASML said it now sees 2026 net sales to be between 36 billion euros and 40 billion euros, compared to a previous forecast of 34 billion euros to 39 billion euros. 

The company makes high-end equipment necessary for manufacturing microchips, with its most advanced extreme ultraviolet lithography, or EUV, machines costing upwards of $400 million.

While ASML has never been allowed to sell EUV machines to China, it has long sold its lower-end deep ultraviolet, or DUV, chipmaking machines there.

Now that’s poised to change. Last week, a bipartisan group of U.S. lawmakers proposed a bill that would cut off ASML’s sale of DUV machines to Chinese chip companies and impact its already shrinking sales there. That law still needs to work its way through the U.S. legislative process.

System sales to China fell to 19% of overall sales in the first quarter, compared to 36% in the December quarter.

Still, guidance remains high as ASML sees continued demand for its highest-end EUV machines, which are the only tools in the world capable of the lithography needed to make the most advanced chips used for AI.

“The semiconductor industry’s growth outlook continues to solidify, driven by ongoing AI-related infrastructure investments,” ASML CEO Christophe Fouquet said in a press release.

“Demand for chips is outpacing supply. In response, our customers are accelerating their capacity expansion plans for 2026 and beyond, supported by long-term agreements with their customers.”

This is the first quarter where ASML has not disclosed order numbers, which are a typically closely-watched metric by investors. Fouquet said Wednesday that ASML’s order intake “continues to be very strong.”

“The market had been a little perturbed by ASML dropping its order numbers, but this is something it will need to get used to and there is enough other data out there to hold the company to account,” Ben Barringer, head of technology research at Quilter Cheviot, said in a note on Wednesday.

In an interview with CNBC on Wednesday, Barringer said the market was already expecting the kind of growth that ASML is now projecting for 2026. “The market was a little bit ahead of them,” Barringer said.

ASML also gave a slightly longer-term outlook. Fouquet said the company could deliver 80 of its so-called low numerical aperture (NA) extreme ultraviolet lithography (EUV) machines in 2027, “if…