TLDR
- ASML shares jumped 25% in 2026 so far, pushing market value above $500 billion for the first time.
- Morgan Stanley sets bull case price target of €2,000, implying 70% rally from current levels.
- TSMC’s $56 billion equipment budget for 2026 represents a 37% increase and guarantees strong ASML orders.
- Analysts expect ASML earnings to nearly double by 2027, reaching €46 per share.
- New U.S.-Taiwan trade pact includes $500 billion financing for American semiconductor expansion.
ASML Holding shares extended their 2026 rally on Friday, climbing 1.2% to €1,163. The stock has surged 25% year-to-date.
The Dutch semiconductor equipment manufacturer crossed a major milestone this week. Its market capitalization exceeded $500 billion.
ASML became just the third European company ever to reach this valuation level. Morgan Stanley’s latest research note fueled the momentum.
The investment bank placed ASML among its top stock picks for 2026. Analyst Lee Simpson and his team outlined multiple catalysts supporting their bullish stance.
Taiwan Semiconductor Manufacturing Company provided the clearest signal. TSMC announced plans to spend up to $56 billion on new equipment in 2026.
That spending level marks a 37% jump from the previous year. As ASML’s largest client, TSMC’s capital expenditure directly flows to the Dutch equipment maker.
High-NA EUV Machines Drive Revenue
ASML’s specialized lithography tools are essential for making advanced chips. The company’s High-NA EUV machines cost over $350 million each.
These machines are the only equipment capable of producing 2-nanometer and 1.6-nanometer semiconductors. AI data centers require these cutting-edge chips to function.
Morgan Stanley’s base case price target sits at €1,400 per share. That estimate ranks second-highest among Wall Street analysts.
The bull case scenario paints an even rosier picture. Under optimal conditions, analysts see shares reaching €2,000.
That would deliver a 70% gain from current prices. The projection assumes continued tech sector strength and earnings beats.
Earnings Growth Underpins Thesis
Profit growth forms the core of Morgan Stanley’s investment case. The bank forecasts ASML will earn approximately €46 per share in 2027.
That figure represents nearly double the company’s 2025 earnings. Intense demand for chipmaking equipment drives the expected profit surge.
A recent U.S.-Taiwan trade agreement adds another layer of support. The deal includes $500 billion in financing and credit guarantees.
These funds will help Taiwanese semiconductor firms expand operations in America. TSMC plans to build multiple fabrication facilities across states like Arizona.
Each new fab requires numerous ASML machines. The trade pact essentially guarantees years of future equipment orders.
Memory Chips Create Second Demand Wave
Beyond logic chips, memory manufacturers are ramping up capacity. Rising memory chip prices are triggering expansion projects.
High Bandwidth Memory for AI accelerators creates fresh demand. Memory producers need ASML’s lithography tools for these buildouts.
China sales have also performed better than expected. ASML’s revenue from Chinese chipmakers exceeded analyst forecasts.
Morgan Stanley analysts cited higher 2027 foundry and memory spending as key conviction drivers. Better-than-feared China demand reinforced their outlook.
Pre-market trading Friday showed ASML at $1,355.07. Wall Street consensus rates the stock as Strong Buy.
Eight analysts recommend buying, one suggests holding, and none rate it a sell. The average price target stands at $1,462.57.
That implies 9.8% upside from current trading levels. ASML shares have gained traction as investors bet on continued AI infrastructure spending.
The company effectively controls access to advanced chip manufacturing. No competitors offer comparable extreme ultraviolet lithography technology.
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