AI<\/a> computer chips flows to the Dutch company that dominates the market for the equipment needed to \u200cmake them. <\/p>\nAfter blowout second quarter earnings, investors and analysts are asking a once far-fetched question: could ASML become Europe’s first ever trillion-dollar firm? <\/p>\n
Key \u200cobstacles include doubts over how long Google, Amazon, and other hyperscalers will keep spending heavily on data centres, and whether ASML, its suppliers and customers such as TSMC and Samsung can execute expansion \u200bplans. <\/p>\n
But after ASML shares spiked 60% this year to push the firm close to a $700 billion valuation, investors and analysts say the trillion-dollar scenario is plausible. <\/p>\n
“I think it has a really good chance of being the first company in Europe to hit the trillion mark,” said Carolyn Bell, lead portfolio manager for Stonehage Fleming’s Global Best Ideas, adding ASML accounted for about 8% of the portfolio. <\/p>\n
“I just don’t know when.” <\/p>\n
THE TRILLION-DOLLAR QUESTION <\/p>\n
Analyst upgrades after the second quarter show it’s no pipe dream. Barclays, Susquehanna \u200cand Bernstein now have 12-month price targets above $2,600 per share – \u2060a 49% rise from current levels and the rough threshold for a $1 trillion market cap. <\/p>\n
ASML is the only seller of extreme ultraviolet (EUV) lithography tools required to print the minute circuitry of the most advanced logic and memory chips. Investors compare its \u2060business to selling picks and shovels during a gold rush. <\/p>\n
John Lamb of Capital Group, whose funds hold around 5% of ASML shares worth $35 billion, praised it as a long-term holding for its “unique assets and wide moats”. <\/p>\n
“The fundamentals for the industry as a whole appear stronger than ever and ASML occupies a critical space,” he said. <\/p>\n
ASML has overtaken and is \u200bnow \u200bstreaking away from other leading European companies Roche, LVMH, Novo Nordisk, AstraZeneca and SAP. <\/p>\n
ASML COULD \u200bBENEFIT FROM AN ‘UPGRADE CYCLE’ <\/p>\n
Shares trade at 38 times forecast earnings for \u200c2027, according to LSEG data, well above multiples for top ASML customer TSMC, which manufactures the AI chips designed by Nvidia and used by OpenAI, Anthropic and the hyperscaler firms. <\/p>\n
ASML investors and analysts said to justify the premium and grow into that valuation several things need to go right, notably continuing hyperscaler demand. <\/p>\n
Trent Masters of Alphinity Investment Management, which has about 3% of its portfolio in ASML, warned that “any cooling of this will flow through to ASML’s earnings”. <\/p>\n
He said other threats include ASML’s ability to manage its supply chain and geopolitical risks, though he is “on balance very positive” about the company’s outlook. <\/p>\n
U.S. lawmakers have proposed the MATCH \u200cAct, a law that could curtail ASML’s sales and servicing of equipment in China – a \u200bmarket where ASML expects to have 20% of sales in 2026. <\/p>\n
Analysts said there are also reasons \u200bASML could keep growing even amid an AI slowdown. <\/p>\n
Kinngai Chan of Summit \u200bInsights Group said AI memory chip makers such as SK Hynix, Samsung and Micron are shifting production away from processes that \u200cuse ASML’s older DUV tools toward new and pricier EUV tools, \u200ba profitable “upgrade cycle”. <\/p>\n
ASML “can surely be” Europe’s first \u200btrillion-dollar firm, ING analyst Marc Hesselink said. <\/p>\n
And then there is the possibility that chip demand accelerates. The new Terafab plant planned by Elon Musk in Texas to supply SpaceX and Tesla<\/a> represents a new source of revenue for ASML. <\/p>\nAntoine Hucher of Aviva Investors said if the company executed \u200bits strategy well and AI demand held up, ASML would \u200ckeep growing, though nothing was certain. <\/p>\n
“ASML could well become the first European company to reach a $1 trillion market cap,” he said. “However, the \u200bvolatility we have seen with AI stocks in the last few weeks suggests the journey to this achievement won’t be a straight line.” <\/p>\n
(Reporting \u200bby Toby Sterling and Nathan Vifflin; Editing by Adam Jourdan and Daniel Wallis) <\/p>\n","protected":false},"excerpt":{"rendered":"By Toby Sterling and Nathan Vifflin AMSTERDAM, July 20 (Reuters) – The global artificial intelligence boom has propelled…\n","protected":false},"author":2,"featured_media":111683,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,25,3222,700,57353],"class_list":["post-111682","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ai","tag-ai","tag-artificial-intelligence","tag-asml","tag-europe","tag-top-of-europe"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/111682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=111682"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/111682\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/111683"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=111682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=111682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=111682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}