ASML hits record high on AI boost — and analysts see plenty of room to run

ASML, the Dutch semiconductor equipment leader, has reached unprecedented stock levels, buoyed by impressive earnings from Taiwanese chip manufacturer TSMC. Recognized as Europe's most valuable company, ASML stands as the sole provider of the sophisticated photolithography machines essential for producing cutting-edge AI chips. Following TSMC's positive earnings report, ASML's shares surged approximately 7%, pushing its market capitalization to around 450 billion euros (about $522 billion). This milestone makes ASML only the third European entity to exceed a half-trillion dollar valuation. In the early months of 2026, ASML's stock has already climbed 25%. Morgan Stanley has projected a potential 70% increase in ASML's stock price amid rising expenditures from chipmakers eager to meet escalating AI demands. The investment bank envisions a scenario where shares could reach up to 2,000 euros if technology valuations continue to rise and profits exceed forecasts, setting a price target of 1,400 euros. The firm highlighted confidence in higher earnings for fiscal year 2027, driven by increased capital expenditure in foundry and memory sectors as well as unexpectedly strong demand from China. Additionally, Bank of America noted that TSMC's capital expenditure guidance surpassed earlier expectations, providing a favorable outlook for ASML as advanced tools like EUV (extreme ultraviolet) lithography become increasingly vital for production efficiency. The surge in demand for AI technology has propelled companies involved in the sector, leading to a robust stock rally among memory chip manufacturers, which are critical for advanced semiconductors created by firms such as Nvidia and AMD. Counterpoint Research anticipates that memory prices could rise by another 40-50% in the first quarter of 2026. JPMorgan remarked on ASML’s impressive stock performance, attributing it to anticipated strong capital expenditures from semiconductor manufacturers beginning late 2026. Samsung, the only major DRAM supplier with available clean room capacity, is expected to significantly ramp up orders, while TSMC's orders are also predicted to be robust. In a related development, Foxconn, a key partner of Nvidia and the largest contract electronics manufacturer globally, reported a 22% increase in revenues for the last quarter of 2025. ASML's largest customer, TSMC, received further encouragement as the U.S. government announced a cap on tariffs for Taiwan at 15%, facilitating investments of at least $250 billion from Taiwanese chip and technology firms into production capabilities within the U.S. ASML is set to disclose its fourth-quarter earnings on January 28.