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ASML (NASDAQ: ASML) has been on a tear -- up 65.4% year to date at the time of this writing and 196.3% in the past three years.
The technology company designs and manufactures lithography systems that use light to print patterns onto microchips, which is arguably the most complex step in semiconductor manufacturing. Demand is pouring in for ASML's most advanced machines, which play an integral role in producing chips for artificial intelligence (AI) applications.
Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
ASML will report third-quarter fiscal 2026 earnings on Oct. 14. It's a report worth paying attention to, even if you're not interested in ASML stock specifically, because ASML provides a leading indicator for AI chip demand.
Here are six numbers investors should pay special attention to, and why ASML is a top growth stock to buy now.
Each quarter, ASML breaks down its revenue by net system sales and installed base management. Net system sales are new and used lithography systems sold, while the installed base encompasses services for existing units.
The aftermarket side of ASML's business is a big deal, as it typically accounts for roughly 30% of total revenue and provides stable cash flow. But what growth investors really want to see is gains from net system sales, as they provide a good indicator of chip manufacturing growth.
Arguably, the most important number in ASML's quarterly report is the percentage split between net system sales going toward logic customers versus memory customers.
Logic chips are used for compute and processing, such as graphics processing units (GPUs), central processing units (CPUs), and application-specific integrated circuits (ASICs). These are the chips designed by companies like Nvidia (NASDAQ: NVDA), Advanced Micro Devices, and Broadcom, as well as the custom AI chips like Alphabet's Tensor Processing Unit, Amazon Web Services' suite of AI chips, Microsoft's Maia AI accelerators, and the Meta Training and Inference Accelerator (MTIA) series by Meta Platforms.
Memory chips such as dynamic random access memory (DRAM), high-bandwidth memory (HBM) -- a specialized form of DRAM -- and NAND flash chips are used to store and retrieve data. Micron Technology, SK Hynix (NASDAQ: SKHY), and Samsung Electronics dominate this industry.
Many logic chips are integrated with high-speed memory chips in AI data centers. For example, Nvidia's Vera Rubin NVL72 includes 72 Rubin GPUs, 36 Vera CPUs, up to 288 GB of HBM4 memory chips per GPU, and associated networking and interconnects that are integrated into the rack-scale offering.
ASML has been experiencing a massive surge in memory chip demand as AI data centers rapidly scale memory chip capacity. In Q2 fiscal 2026, logic made up 51% of net system sales compared to 49% for memory. But just a year prior in Q2 fiscal 2025, logic was 69%, and memory was 31%.
During its Q2 fiscal 2026 earnings call, ASML said it expects memory-related net service sales to grow by over 75% in fiscal 2026.
The split between logic and memory is particularly important for the long-term runway of ASML's extreme ultraviolet (EUV) systems. ASML has a virtual monopoly on the global EUV market, which uses 13.5-nanometer (nm) light compared to 193 nm for deep ultraviolet (DUV) systems. Short wavelengths enable more precise patterning of intricate features on silicon wafers, thereby boosting performance.
In Q2 fiscal 2026, EUV accounted for 57.6% of total system sales, while DUV accounted for 42.4%. Investors should look to see if EUV systems can continue making up a larger share of ASML's sales.
EUV machines are overkill for general-purpose chips, but they are critical for complex logic chips. The memory market is catching on, too.
Memory chips could dominate ASML's order book for the foreseeable future, with the bulk of those sales going to EUV.
As mentioned, HBM chips play a critical role in AI data centers. The HBM4 memory chips that sit alongside GPUs in rack-scale solutions like the Vera Rubin NVL72 are the most advanced versions, with SK Hynix completing the world's first HBM4 development in September 2025. That same month, alongside representatives from ASML, SK Hynix introduced the first High-NA EUV machine for commercial-scale memory chip manufacturing.
"NA" refers to numerical aperture, a measure of how finely an optical system can collect and focus light. High-NA EUV is ASML's most advanced system, with even higher resolution than its Low-NA EUV machines. It sold just one of these units last quarter, so investors should watch to see how that rollout is progressing.
Another important number to monitor is margins. ASML is guiding for 54% to 56% gross margin for the full fiscal year.
Maintaining high margins indicates that demand continues to outpace supply and gives ASML pricing power. Growing EUV system sales -- and especially High-NA, which can cost around $400 million per unit -- should expand margins over the long term.
In its Q2 fiscal 2026 earnings release, ASML said that it is increasing its manufacturing capacity due to an extremely strong order intake in the first half of the fiscal year.
ASML plans to increase its Low-NA EUV capacity by 30% compared to its existing 65-unit capacity in 2027 and is considering boosting it by another 30% in 2028. It is also considering adding 30% to its 2027 DUV immersion capacity of 130 units, with a potential 30% ramp-up for those units in 2028.
Investors should monitor ASML's plans to further increase its manufacturing capacity in response to a growing backlog. Capacity increases could also indicate that ASML expects demand to be more lasting rather than a temporary cyclical surge.
ASML is one of the best growth stocks to buy now because it captures demand bottlenecks across both logic and memory chips, regardless of which company is gaining market share. ASML's growing installed base paves the way for recurring services revenue, helping it weather the ebbs and flows of the semiconductor industry.
ASML is far from cheap at 41.3 times forward earnings, but its market position and virtual monopoly in the EUV market make it arguably the highest-quality AI stock to buy for long-term investors.
Most investors think they missed the AI boat because they didn't buy Nvidia in 2005.
But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout, a massive technology build-out that Google's CEO says could be more profound than fire or electricity.
While everyone watches the chip designers, one "backbone" company provides the critical technology that Nvidia and AMD literally cannot function without. We've detailed this under-the-radar player in our new AI Playbook.
Daniel Foelber has positions in ASML, Broadcom, and Nvidia. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Alphabet, Amazon, Broadcom, Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
ASML Earnings: 6 Numbers Long-Term Investors Should Look For on Oct. 14 was originally published by The Motley Fool
