Reading the Signals: ASML’s Q1 and the Bull Case for Semiconductors

One of the most notable takeaways from the report was the strength in EUV bookings and shipment schedules, despite macroeconomic headwinds. ASML reported robust demand from both logic and memory customers, signaling continued investment into advanced nodes such as 3nm and 2nm. This is particularly relevant for NVIDIA, which relies on TSMC’s most advanced process technologies for manufacturing its high-performance GPUs and AI accelerators. Strong EUV demand indicates that TSMC and other foundries are ramping up capacity for next-gen chips — a bullish signal for NVIDIA’s future supply and scaling needs.

Moreover, ASML’s reiteration of its long-term growth outlook — projecting €44–60 billion in annual revenue by 2030 — reinforces the structural expansion of the AI and high-performance computing (HPC) markets. These are core end-markets for NVIDIA. As AI workloads continue to evolve, requiring more complex and power-efficient chip architectures, ASML’s position at the heart of the fabrication process ensures it remains closely aligned with NVIDIA’s roadmap and strategic priorities.

The report also highlighted continued strength in demand from China, which accounted for over 25% of ASML's system sales. While NVIDIA faces export restrictions on its highest-end chips to China, ASML’s exposure suggests that Chinese fabs are still aggressively investing in capacity, particularly for trailing-edge and domestic alternatives. This growing ecosystem could create both competitive and collaborative dynamics for NVIDIA in the medium term, especially in AI inference and edge computing.

On the margin side, ASML posted a 54.0% gross margin — well above expectations — thanks to a favorable mix of EUV and DUV tools and operational efficiencies. This reflects improving cost structures and stable pricing power across the industry. Such margin resilience supports the thesis that advanced semiconductor equipment remains in high demand, which in turn implies sustained capital expenditures (capex) by foundries. For NVIDIA, this translates into confidence that the ecosystem is prepared to meet the surging AI-driven demand.

From a supply chain perspective, ASML’s strong performance eases concerns about capacity bottlenecks or tool delivery delays that could have impacted key customers like TSMC or Samsung. By confirming healthy order backlogs and improved manufacturing throughput, ASML reassures the market that chipmakers will have the tools they need to deliver on customer commitments — a vital factor in NVIDIA’s ability to scale its hardware offering.

Investor sentiment toward the semiconductor sector is also likely to benefit from ASML’s results. The combination of upbeat long-term guidance and strong gross margins could improve risk appetite for high-growth semiconductor names, especially those exposed to AI and datacenter trends. NVIDIA, as the leading AI chipmaker, stands to gain from this broader re-rating, particularly if its own upcoming earnings align with ASML’s optimistic tone.

ASML’s commentary on geopolitical risks and customer uncertainty was cautious but balanced. CEO Christophe Fouquet acknowledged some softness in demand visibility from select clients, which may introduce short-term volatility. However, the company reaffirmed its confidence in the multi-year technology investment cycle — a view echoed by NVIDIA, which has consistently stressed that AI adoption is still in its early innings.

Perhaps most importantly, ASML’s earnings provide a clear signal that innovation cycles in semiconductors remain intact. The successful commercialization of EUV and the planned deployment of High-NA EUV systems reinforce the idea that Moore’s Law is evolving, not ending. For NVIDIA, this technological progress is essential for delivering more powerful and energy-efficient chips — a necessity in AI model training and deployment at scale.

In summary, ASML’s Q1 2025 report underscores the continued strength of the semiconductor ecosystem and supports a bullish narrative for NVIDIA and other advanced chipmakers. Despite macro and geopolitical uncertainties, the fundamentals remain solid, driven by demand for AI, cloud, and HPC. As long as the enablers of advanced chip production — like ASML — continue to deliver, the stage is set for sustained growth across the semiconductor sector.