ASML’s photolithography machines have become indispensable for advanced AI chip production, and over the past 12 months the company’s share count has outperformed most of its equipment-maker peers. In the past year, ASML’s stock climbed approximately 80%, with 17% of that gain occurring in the first month of 2026 alone. This momentum reflects a combination of surging capital expenditure by hyperscalers and memory makers, all of whom require ASML’s extreme ultraviolet (EUV) systems to fabricate the latest high-performance nodes. Shipments of EUV tools in the fourth quarter increased by 25% year-over-year, and the company’s order backlog now stands at a record €105 billion, up from €80 billion twelve months earlier. Management forecasts 20% annual revenue growth for the next three years, driven largely by AI-related fab expansions in Taiwan, the U.S. and South Korea.

Despite the parabolic share appreciation, ASML trades at roughly 44.6 times forward earnings, a premium that analysts argue is justified by its de facto monopoly in EUV lithography. More than 90% of the top 10 global foundry and memory customers have active service agreements for ASML’s EUV machines, ensuring recurring revenue from maintenance and upgrades. Wall Street consensus among 18 analysts places the 12-month price target at $1,500, implying upside of 35% from current levels. Several firms have raised their estimates in recent weeks, citing acceleration in multi-patterning tool orders and new service contracts that could add €1.5 billion to annual recurring revenue by 2026.

Investors should weigh macro-sensitive headwinds, including chip-cycle volatility and potential delays in EUV tool deliveries due to supply-chain constraints. However, ASML’s flexible modular production lines and long-duration service contracts mitigate these risks. On the upside, the imminent ramp of high-NA EUV machines could unlock an incremental €5–7 billion in annual revenue by 2027, as customers transition to next-generation nodes for AI accelerators. Furthermore, emerging opportunities in specialized lithography for photonics and silicon carbide power devices offer new revenue streams beyond traditional logic and memory markets.