Key Points
ASML has monopolized a crucial chipmaking technology.
The AI boom will drive the top foundries to buy more of ASML’s systems.
- 10 stocks we like better than ASML ›
ASML's (NASDAQ: ASML) stock rallied about 90% over the past 12 months, but I believe it could surge even higher this year as the AI market expands. ASML is the world's largest producer of lithography systems, which are used to optically etch circuit patterns onto silicon wafers. It's also the only producer of high-end extreme ultraviolet (EUV) lithography systems, which are required for manufacturing the smallest, densest, and most power-efficient chips.
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Why will ASML's stock soar?
All of the world's top foundries -- including TSMC (NYSE: TSM), Samsung, and Intel (NASDAQ: INTC) -- use ASML's EUV systems in their most advanced nodes. So without ASML, fabless chipmakers like Nvidia (NASDAQ: NVDA) couldn't produce their top-tier AI chips.
ASML's growth is cyclical, but it expects its revenue to reach 44 billion euros ($52.3 billion) to 60 billion euros ($71.3 billion) by 2030. At its midpoint, that would equal a 10% CAGR from 2025. From 2025 to 2027, analysts expect its EPS to grow at a 24% CAGR.
ASML's stock isn't cheap at 41 times this year's earnings. However, its dominance of a crucial chipmaking technology and direct exposure to the booming AI market justify that premium valuation. Those catalysts should drive its stock higher in 2026 and beyond.
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Leo Sun has positions in ASML. The Motley Fool has positions in and recommends ASML, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
