ASML Holding NV’s orders in the second quarter beat estimates after the artificial intelligence boom drove demand for its sophisticated chip-making machines, even as Chief Executive Officer Christophe Fouquet struck a cautious note for 2026.

Dutch semiconductor company, ASML Holding NV warned investors that its growth outlook for 2026 is now under a cloud.

Chipmaking equipment supplier ASML said the impact of US tariffs was “a bit less negative than we anticipated”, as artificial intelligence drove strong orders for its lithography machines.

ASML Holding, the microchip-equipment maker that produces the sophisticated machines used to develop semiconductors, caught a broker downgrade just ahead of its second-quarter results.

The equipment supplier to semiconductor makers posted revenue of $8.73 billion in the period, which beat Street forecasts. Three analysts surveyed by Zacks expected $8.55 billion. ASML shares have increased 19% since the beginning of the year. The stock has declined 23% in the last 12 months.

Next, we know the semiconductors have become the hottest group in the market, as the torch has been passed from software to hardware.

New orders, a key indicator of future revenue, are projected to hit $6.4 billion, driven by robust AI demand from TSM and SK Hynix. However, recent softness in orders – the first quarter came in below expectations – has weighed on the stock, which dropped 6% after the last report.

ASML Holding NV Chief Financial Officer Roger Dassen said on an earnings call Wednesday it will be “positive for chip demand” if Washington lifts restrictions on some artificial intelligence processors.