\n The global artificial intelligence boom has propelled ASML to the top of Europe\u2019s stock market, as soaring demand for AI computer chips flows to the Dutch company that dominates the market for the equipment needed to make them. After blowout second-quarter earnings, investors and analysts are asking a once-far-fetched question: could ASML become Europe\u2019s first-ever trillion-dollar firm? Key obstacles include doubts over how long Google, Amazon, and other hyperscalers will keep spending heavi<\/p>\n
heavily on data centres, and whether ASML, its suppliers, and customers such as TSMC and Samsung can execute expansion plans.<\/p>\n
But after ASML shares spiked 60 per cent this year to push the firm close to a US$700 billion valuation, investors and analysts say the trillion-dollar scenario is plausible.<\/p>\n
\u201cI think it has a really good chance of being the first company in Europe to hit the trillion mark,\u201d said Carolyn Bell, lead portfolio manager for Stonehage Fleming\u2019s Global Best Ideas, adding ASML accounted for about 8 per cent of the portfolio.<\/p>\n
\u201cI just don\u2019t know when.\u201d<\/p>\n
The trillion-dollar question<\/p>\n
Analyst upgrades after the second quarter show it\u2019s no pipe dream. Barclays, Susquehanna, and Bernstein now have 12-month price targets above US$2,600 per share \u2013 a 49 per cent rise from current levels and the rough threshold for a US$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 business to selling picks and shovels during a gold rush.<\/p>\n
John Lamb of Capital Group, whose funds hold around 5 per cent of ASML shares worth US$35 billion, praised it as a long-term holding for its \u201cunique assets and wide moats\u201d.<\/p>\n
\u201cThe fundamentals for the industry as a whole appear stronger than ever, and ASML occupies a critical space,\u201d he said.<\/p>\n
ASML has overtaken and is now streaking away from other leading European companies, such as Roche, LVMH, Novo Nordisk, AstraZeneca, and SAP.<\/p>\n
ASML could benefit from an \u201cupgrade cycle\u201d<\/p>\n
Shares trade at 38 times forecast earnings for 2027, 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 per cent of its portfolio in ASML, warned that \u201cany cooling of this will flow through to ASML\u2019s earnings\u201d.<\/p>\n
He said other threats include ASML\u2019s ability to manage its supply chain and geopolitical risks, though he is \u201con balance very positive\u201d about the company\u2019s outlook.<\/p>\n
US lawmakers have proposed the MATCH Act, a law that could curtail ASML\u2019s sales and service of equipment in China \u2013 a market where ASML expects to account for 20 per cent of its sales in 2026.<\/p>\n
Analysts said there are also reasons ASML could keep growing even amid an AI slowdown.<\/p>\n
Kinngai Chan of Summit Insights Group said AI memory chip makers such as SK Hynix, Samsung, and Micron are shifting production away from processes that use ASML\u2019s older DUV tools toward new and pricier EUV tools, a profitable \u201cupgrade cycle\u201d.<\/p>\n
ASML \u201ccan surely be\u201d Europe\u2019s first trillion-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 represents a new source of revenue for ASML.<\/p>\n
Antoine Hucher of Aviva Investors said if the company executed its strategy well and AI demand held up, ASML would keep growing, though nothing was certain.<\/p>\n
\u201cASML could well become the first European company to reach a US$1 trillion market cap,\u201d he said. \u201cHowever, the volatility we have seen with AI stocks in the last few weeks suggests the journey to this achievement won\u2019t be a straight line.\u201d<\/p>\n
Reporting by Toby Sterling and Nathan Vifflin. Editing by Adam Jourdan and Daniel Wallis. All courtesy of Reuters.<\/p>\n","protected":false},"excerpt":{"rendered":"The global artificial intelligence boom has propelled ASML to the top of Europe\u2019s stock market, as soaring demand…\n","protected":false},"author":2,"featured_media":32560,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[6101,65,5691],"class_list":["post-32559","post","type-post","status-publish","format-standard","has-post-thumbnail","category-asml","tag-amazon","tag-asml","tag-google"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts\/32559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/comments?post=32559"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts\/32559\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/media\/32560"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/media?parent=32559"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/categories?post=32559"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/tags?post=32559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}