Dutch semiconductor equipment giant ASML Holding NV on Wednesday sought to reassure investors about its long-term prospects, even as it warned of a “significant” sales decline in China next year.

The company, which recently became Europe’s most valuable listed firm, said it expects 2026 total net sales to remain at least on par with 2025 levels, easing fears of a deeper slowdown. However, the firm cautioned that customer demand in China—its second-largest market—will fall sharply compared with 2024 and 2025.

The warning comes amid intensifying U.S.-China trade tensions and export restrictions from the Dutch government, both of which have pressured ASML’s business in Asia.

Earnings Snapshot (Q3 2025):

• Net Sales: €7.52 billion (vs. €7.79 billion expected)

• Net Profit: €2.13 billion (vs. €2.11 billion expected)

Despite missing slightly on sales, ASML beat profit expectations, reflecting stronger operational discipline and robust demand from chipmakers investing in next-generation technology.

Investor Sentiment and Market Reaction:

Shares in ASML fell earlier this year after management said it could not confirm growth for 2026 amid macroeconomic and geopolitical uncertainty. The new forecast aims to soothe investor jitters following that announcement.

Analysts from Morgan Stanley, UBS, and Jefferies remain upbeat, citing the expansion of AI chip foundries, growth in semiconductor manufacturing in China, and improved demand in smartphones, PCs, and AI memory chips.

ASML is also poised to gain from the recently announced $5 billion semiconductor equipment deal between Nvidia and Intel, which is expected to drive fresh demand for chip-making machinery globally.

Outlook:

While 2026 could bring challenges in China, ASML’s technological leadership in extreme ultraviolet (EUV) lithography—a critical process for advanced chips—keeps it in a strong position to capitalize on the ongoing AI-driven semiconductor boom.