Markets
markets
Luke Kawa & David Crowther

ASML rises on revenue beat and rosy top-line outlook, outweighing slightly softer margins

Dutch semi equipment giant ASML’s strong start to the year looks set to continue after the company’s solid revenue beat, rosy 2026 guidance, and strong order book outweighed softer margins in the final quarter of last year. For Q4, the company reported:

  • Net sales: €9.718 billion (estimate: €9.57 billion). A 1.6% beat.

  • Adjusted earnings per share: €7.34 (estimate: €7.56). A 3% miss.

The guidance told a similar story, with a stronger top-line and marginally softer margin outlook.

For the full year in 2026, ASML management expects total net sales to be between €34 billion and €39 billion, with a gross margin between 51% and 53%. The analyst consensus estimate, as of 4 a.m. ET this morning, was expecting €35.1 billion, with an anticipated gross margin of 52.9%. At the midpoints of those ranges, the guidance is solidly above on revenue and a bit below on margin.

For the current quarter, ASML said sales would range from €8.2 billion to €8.9 billion, with the same gross margin profile as the full year (between 51% and 53%). Even the low end of that revenue guidance is above the Street’s forecasts, with Q1 consensus estimates compiled by Bloomberg showing €8.1 billion in revenue.

The strength of demand for the company’s highly sought-after extreme ultraviolet lithography machines was underscored in its bookings, one of the most closely watched figures in the industry, which came in at €13.2 billion in Q4 — a blowout compared to the €6.8 billion analysts were expecting.

The company also announced that it would be cutting about 1,700 jobs in the Netherlands and the US, representing about a 4% reduction to its workforce, per Bloomberg.

ADRs of Europe’s largest publicly traded company pushed higher immediately after the print, though they have since pared some of those gains, currently up around 4.4% as of 4:25 a.m. That upward jolt adds to a strong start to 2026, with the stock up 36% heading into this report. The longevity and magnitude of the AI boom is spurring massive capital expenditure not just by hyperscalers, but also from the chip companies that supply the brains behind this build-out.

ASML and other semicap companies offer equipment that enables chip companies to make more chips. The Dutch company’s extreme ultraviolet lithography occupies a particularly important choke point in chip development by etching designs onto tiny wafers.

Back in July, ASML rattled investors by warning that growth in 2026 couldn’t be guaranteed. These results, backlog, and guidance suggest that those fears won’t come to pass, to put it mildly.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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