ASML Holding NV unveiled its Q2 2025 earnings before the U.S. market opened on July 16, 2025, revealing mixed results against a backdrop of semiconductor industry headwinds. The Dutch lithography giant posted revenue of €7.7 billion, marking a 23.2% year-over-year increase and surpassing market expectations of €7.5 billion. This growth stemmed primarily from recognizing revenue for one High NA EUV system and increased installation upgrade services.

Gross margins outperformed guidance, reaching 53.7% versus the projected 50-52% range. This upside originated from the higher-margin services segment and milder-than-anticipated tariff impacts. Net profit surged 45% annually to €2.3 billion, translating to a 30% net margin, driven by robust top-line expansion and margin improvements.

Breaking down the business segments, lithography systems generated €5.6 billion (up 17.5% YoY), while services contributed €2.1 billion (up 41.4%). Despite services being the primary growth engine this quarter, lithography equipment remained ASML's core revenue driver at 73% of total sales. Within this segment, EUV and ArFi systems dominated with combined 91% share—EUV contributed approximately €2.5 billion and ArFi €2.3 billion. Shipment-wise, ArFi led with 31 units, while EUV shipped 11 units. The price differential remained stark: EUV units averaged €230 million versus ArFi's €75.8 million.

Geographically, Taiwan accounted for 35% of revenue (€2.7 billion), with mainland China following at 27% (€2.1 billion). China's shipment levels stayed stable, aligning with ASML's over-25% regional allocation forecast. Orders showed tentative recovery, climbing 41% sequentially to €5.54 billion, exceeding the €4.5-4.8 billion consensus. This rebound suggests easing caution among clients regarding tariff uncertainties.

However, Q3 guidance disappointed. Revenue projections of €7.4-7.9 billion fell short of the €8.21 billion consensus, while gross margin guidance of 50-52% matched expectations. Full-year revenue growth was revised to approximately 15% (around €32.5 billion), down from the €30-35 billion range. This implies potential Q4 revenue contraction to about €9.16 billion, below Q4 2024's €9.26 billion.

The tempered outlook reflects persistent challenges: U.S. tariff uncertainties continue weighing on client capital expenditure, Samsung and Intel maintain budget tightening, and China risks linger. While ASML retains its EUV monopoly and remains critical for foundries like TSMC, near-term pressures dominate. Trading at 28x forward P/E against 29% projected earnings growth, the stock faces headwinds from traditional semiconductor segments—notably modest smartphone and PC shipment growth—contrasting sharply with NVIDIA's AI-fueled momentum. This divergence highlights ASML's vulnerability to broader industry cycles despite advanced node demand.