ASML Stock Surges As AI Chip Boom Fuels Record Growth

ASML Holding, the Dutch titan of semiconductor equipment, is having a moment in the sun—and it’s not just a passing phase. Over the past year, ASML’s stock has soared by an eye-popping 75%, trouncing the PHLX Semiconductor Sector index’s 47% gain, according to The Motley Fool. This surge is more than a lucky break; it’s the result of a perfect storm of industry trends, blockbuster orders, and a technological edge that’s tough to beat.

What’s driving this momentum? The answer lies in the insatiable demand for advanced chips, especially those powering artificial intelligence (AI) applications. ASML’s extreme ultraviolet (EUV) lithography machines are the only game in town when it comes to manufacturing the cutting-edge chips needed for today’s high-performance, energy-efficient computing. As Reuters Breakingviews put it, “AI dreams still depend on its kit.”

But the optimism isn’t just coming from the markets. Morgan Stanley, one of the world’s leading investment banks, is betting big on ASML’s future. Their analysts predict that ASML could nearly double its earnings per share by 2027 compared to 2025. That’s not just blue-sky thinking—it’s grounded in some impressive numbers and industry moves.

Let’s dig into the details. Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, recently announced a 32% boost in capital spending for 2026, bringing its total to $54 billion. A whopping 70% to 80% of that will be channeled into advanced process node chip production—specifically, chips with features of 7 nanometers or smaller. These advanced chips require the very EUV machines that only ASML can provide. It’s a classic case of having what everyone else needs.

Meanwhile, memory chip manufacturers are also ramping up. Micron Technology, for example, plans to invest $20 billion in capital expenditures this fiscal year—a 45% jump over last year. The driving force? A shortage of high-bandwidth memory (HBM) chips, which are crucial for AI data center accelerators. As demand for AI grows, so too does the need for ASML’s specialized equipment.

This surge in investment isn’t just a flash in the pan. The industry association SEMI projects a 69% increase in advanced chipmaking capacity through 2028. With foundries and memory makers racing to expand, ASML’s order books are swelling. In fact, as of January 28, 2026, the company reported “blowout orders,” according to Reuters Breakingviews. It’s a clear sign that the market’s hunger for advanced chips—and the tools to make them—is far from sated.

But what about the numbers? Morgan Stanley estimates that ASML’s earnings per share could reach 46 euros in 2027—about $53.85 at current exchange rates. If the company’s shares trade at the U.S. technology sector’s average earnings multiple of 44.7, its stock price could hit $2,407. That’s an 81% leap from where it stands today. For investors, that kind of upside is hard to ignore.

Of course, no story about ASML would be complete without mentioning its near-monopoly in EUV lithography. As Reuters succinctly noted, “ASML’s monopoly in semiconductor lithography justifies a larger share-price premium.” The company’s unique position means it can command higher prices and maintain a valuation premium that rivals can only dream of.

Yet, it’s not all smooth sailing. Some investors are fretting about geopolitics—specifically, whether China might one day replicate ASML’s circuit-printing technology. If that were to happen, it could erode ASML’s hard-won valuation premium. According to Reuters Breakingviews, “Investors have been fretting about geopolitics, specifically whether China can mimic its circuit-printing techniques, leading to a loss of the company's historic valuation premium.”

Still, the consensus is that ASML’s technological moat is deep and wide. Replicating its EUV technology isn’t just a matter of throwing money at the problem; it requires decades of research, proprietary know-how, and a global network of suppliers and customers. For now, at least, the company’s dominance looks secure.

It’s also worth noting that the broader semiconductor industry is in the midst of a historic expansion. AI applications—from language models to autonomous vehicles—are driving unprecedented demand for advanced chips. That, in turn, is fueling a wave of capital spending across the sector. As foundries and memory makers race to keep up, ASML finds itself at the center of the action.

But should investors rush to buy ASML stock right now? The Motley Fool offers a note of caution. While the company’s prospects look bright, their Stock Advisor analyst team recently identified what they believe are the 10 best stocks to buy now—and ASML wasn’t on the list. Sometimes, even the hottest stocks don’t make the cut when analysts crunch the numbers. Still, the publication acknowledges the company’s impressive run and the strong case for continued growth.

For those keeping score, The Motley Fool points out that Stock Advisor’s total average return is a staggering 949%, handily beating the S&P 500’s 195% over the same period. The lesson? Even in a red-hot sector, it pays to do your homework and consider a range of opportunities.

Back to ASML: what about the long-term risks? The biggest threat, as noted, is the potential for technological catch-up by competitors, especially in China. But for now, the company’s monopoly on EUV technology—and the explosive growth in AI-driven chip demand—gives it a commanding lead. As Reuters Breakingviews put it, “AI dreams still depend on its kit.”

In summary, ASML is riding a wave of industry growth, technological necessity, and strategic investment that shows no sign of cresting. With industry giants like TSMC and Micron opening their wallets, and a near-monopoly on the tools that make the world’s most advanced chips, the Dutch firm looks set to remain a cornerstone of the semiconductor world for years to come. Investors will be watching closely to see if the company can deliver on the lofty expectations set by Morgan Stanley and others—but for now, the future looks bright.

As the semiconductor industry continues its relentless march forward, ASML stands at the crossroads of innovation and demand, shaping the very future of technology itself.