ASML lifts forecast, chips rally, Europe stays cautious

ASML posted second-quarter net revenue of 9.3 billion euros, up from 8.7 billion euros in the first quarter, with net profit of 2.9 billion euros. The world’s largest maker of chipmaking equipment beat expectations, raised its financial forecasts for 2026 and announced plans to expand capacity. Demand tied to artificial intelligence, the company said, is not letting up. The shares responded without delay, rising from about 3.8 percent in early trading to around six percent during the day.

Earnings per share improved from 7.15 to 7.59 euros and the gross margin widened from 53 to 54 percent. The margin matters more here than the revenue line. Revenue growth on a flat margin would mean the company is buying volume with discounts, while an extra point of gross margin on a quarter this size says ASML still sets its price rather than accepting one.

What the capacity announcement actually means

A raised forecast is news for one quarter. A capacity expansion is news for several years. Capital spending on new production lines does not pay back within three months: a company signs it off only when the order book shows demand that outlives the current cycle. That signal, not the 2.9 billion euros of profit, is what the market bought on July 15.

The effect spread down the supply chain. Chip-related stocks ASM and Soitec each added more than 1 percent, and the technology sector rose about 1 percent to become the strongest corner of the European market. Futures pointed to a firmer Wall Street open, with Nasdaq contracts up 0.5 percent and S&P 500 contracts up 0.1 percent.

Why is tech rising while the European index stands still?

The pan-European STOXX 600 was flat at about 641 points. One sector, however strong, cannot carry an index when the macro backdrop works against it. Oil above $85 and tensions around the Strait of Hormuz are keeping investors defensive, and that bill is paid by airlines, chemicals and everyone else for whom energy is an input cost. A good quarter at one company does not cancel the geopolitical risk priced into a barrel.

The session had another side to it. Richemont jumped more than five percent on better-than-expected results, helped by strong demand for jewellery in Asia and the Americas, lifting the luxury sector by 2.9 percent. At the other end, SAP fell and dragged the German benchmark lower, while Axfood lost 11.2 percent after weak results.

For investors in the region, the message is not the size of the ASML move. The capital cycle in chip manufacturing remains open, and that sustains demand for equipment, energy and logistics. The risk still sits with energy: as long as the barrel holds above $85, European indices will greet good quarters coolly, because one company’s profit growth is measured against a cost that hits everyone else.

When you judge the European market, which matters more to you: a single company’s results or the price of oil?