ASML's 2026 Secret to Explosive Growth Lies in Memory Systems

The chipmaking equipment manufacturer ASML just delivered a masterclass in what strong fundamentals look like. In its fourth quarter, the company posted net sales growth of 29% year-over-year, capping off a full year where total revenue climbed to 32.7 billion euros—a 15% increase from the prior year. But the real story isn’t just about impressive earnings; it’s about what comes next. The company entered 2026 with a towering order backlog of $38.8 billion and pulled in record quarterly net bookings of 13.2 billion euros, painting a picture of robust demand extending well into the future.

While earnings per share reached 7.35 euros—up 33%—the figure fell slightly short of investor expectations, which may explain some recent pullback in the stock price. At a valuation of 55 times earnings, the market has factored in considerable optimism. Yet for those willing to look past short-term fluctuations and the 1,700 job cuts announced last week, the underlying growth trajectory tells a compelling story.

Fourth-Quarter Results Signal Accelerating Momentum for the Equipment Maker

ASML’s financial performance demonstrates the strength of semiconductor demand across the industry. The 29% revenue surge reflects not just cyclical strength, but structural shifts in how chips are manufactured. The company’s extreme ultraviolet (EUV) lithography machines—the crown jewels of its product portfolio—contributed 7.4 billion euros to quarterly bookings, underscoring their indispensable role in next-generation chip production.

What’s particularly striking is the composition of those bookings: approximately 56% were earmarked for memory systems, while logic systems accounted for the remaining 44%. This split reveals a critical insight into where industry capital is flowing. Memory chip manufacturers like Micron Technology, one of ASML’s largest clients, are investing heavily in capacity and capability upgrades. The 2026 sales guidance of between 34 billion euros and 39 billion euros—representing 12% growth at the midpoint—suggests this momentum will persist throughout the year.

Memory Systems and EUV: The Perfect Convergence Driving 2026

The real secret to ASML’s growth outlook lies in the convergence of multiple powerful forces. During the earnings call, CEO Christophe Fouquet highlighted that demand for high-bandwidth memory and double data rate (DDR) memory systems remains exceptionally strong, with supply constraints likely to persist through at least 2026. This creates an unusual market dynamic where capacity cannot keep pace with demand—precisely the environment that benefits equipment manufacturers like ASML.

Several factors are propelling this surge in memory demand. The buildout of data center infrastructure continues at a breakneck pace, driven by massive investments in artificial intelligence systems. Simultaneously, memory chip manufacturers are progressively incorporating more EUV process layers into their DRAM designs, a technical advancement that dramatically improves performance and density. Fouquet characterized this alignment as “a perfect storm”—and he may have understated it.

“When it comes to EUV, DRAM share will most probably increase over time,” Fouquet said during the call. “This is a very good dynamic on DRAM, which based on all our customer discussions we don’t see stopping. We should benefit from that in the years to come.” The implication is clear: as data center operators demand more powerful chips and memory manufacturers race to meet that demand using cutting-edge EUV technology, ASML finds itself positioned at a critical chokepoint in the supply chain.

Why 2026 Represents a Potential Inflection Point

The stock has already run 33% in 2026 and 99% over the past 12 months, which explains some investor caution following a recent pullback. However, the company’s guidance and booking trajectory suggest the run may have further to go. The 38.8 billion euro backlog provides revenue visibility into 2027 and potentially beyond, offering investors a rare glimpse of sustained growth momentum in the semiconductor equipment sector.

The combination of record bookings, elevated memory demand, ongoing data center expansion, and the structural shift toward EUV lithography creates an environment where ASML’s growth acceleration could surprise even optimistic observers. While near-term valuation multiples are stretched at 55 times earnings, the company’s ability to convert its record order backlog into revenue—and potentially expand margins through operational leverage—could justify elevated multiples over time.

For long-term investors willing to tolerate near-term volatility, ASML represents exposure to one of the most critical components of the semiconductor supply chain at a moment when demand fundamentals appear exceptionally robust. The 2026 outlook is not a guarantee, but the underlying conditions suggest the company’s secret weapon—sustained memory system growth driven by AI infrastructure and EUV adoption—has only begun to be weaponized.