ASML became the third European company to exceed a half-trillion-dollar valuation this week, with its market capitalization climbing past €450 billion (approximately $522 billion) following a surge in chipmaker spending tied to artificial intelligence. Shares have rallied roughly 25% year-to-date as customers accelerate investments in extreme ultraviolet lithography systems for AI accelerator production. The milestone underscores ASML’s unique position as the sole supplier of advanced photolithography tools necessary for sub-7 nanometer node manufacturing.

In its latest research note, Morgan Stanley assigned ASML a bull-case target implying a 70% share-price upside, based on expectations that foundry and memory capital expenditures will exceed current forecasts and China demand will remain resilient. The bank highlighted that elevated order intake for EUV and advanced deposition equipment over the next two to three quarters should support above-consensus 2027 earnings. Analysts pointed to potential upside if AI-related capex continues to outpace recession fears and margins hold above long-term targets.

Taiwan Semiconductor’s announcement of a 2026 capital expenditure budget in the range of $52 billion to $56 billion—far above consensus—directly benefits ASML, as more than half of that spending is earmarked for EUV and high-NA EUV tools. Bank of America noted that the stronger-than-expected guidance underpins near-term upside for ASML, given its dominant market share in critical lithography systems. The revised spending plan implies material increases in machine orders for the next several quarters, bolstering ASML’s already record-high backlog.

ASML is advancing its high-numerical-aperture EUV platform into volume production to replace multi-pattern deep-ultraviolet techniques at sub-2 nanometer logic and DRAM nodes. This technology leap promises to improve wafer throughput by up to 30% and enable chipmakers to maintain scaling roadmaps through 2026 and beyond. ASML’s R&D investments of more than €2 billion annually have fortified its technology moat, ensuring that competitors remain years behind in next-generation lithography capabilities.