ASML Solid 1Q26, IBM and DUV (ARFi) lift FY26 guidance in line with CSS est.

ASML reported solid 1Q26 results, with revenue 1% above CSS expectations, driven by the strong IBM performance amid robust AI-driven demand and capacity constraints, particularly in memory. The stronger mix lifted gross margin by 80bps vs expectations, while diluted EPS came in 7% higher, supported by higher sales, margins, interest income and equity income. ASML maintained its FY26 gross margin guidance of 51–53%, where we see some upside, and revised FY26 revenue guidance to €36–40bn (from €34–39bn), supported by stronger-than-expected DUV immersion and IBM performance, with CSS close to the midpoint. The width of the FY26 guidance range mainly reflects uncertainty around export controls. While the 2Q26 outlook was somewhat softer and lacked commentary on High-NA demand, we expect a strong FY26 that is reflected in the valuation. We therefore maintain our Hold rating and €1,175 TP.