The rise of artificial intelligence (AI) has focused investor attention on chip designers like Nvidia Corporation (NVDA). But billionaire hedge fund manager Philippe Laffont is making a huge bet on a different part of the semiconductor ecosystem: the company that supplies the critical machines needed to make the world’s most advanced chips.
In the first quarter, Philippe Laffont’s Coatue Management initiated a significant new stake in ASML Holding NV (ASML), signaling a growing conviction that the next phase of the AI arms race could increasingly benefit semiconductor infrastructure leaders rather than just the chipmakers themselves. Coatue added 510,000 ASML Holding shares valued at $655.4 million, while reducing his stake in Nvidia.
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The bullish sentiment around ASML is also gaining support on Wall Street. UBS analysts recently rated ASML the top chip stock in Europe, highlighting the company’s dominant position in extreme ultraviolet lithography, a technology widely considered indispensable for producing cutting-edge AI processors. With spending on AI-powered semiconductors accelerating, investors increasingly view ASML as one of the most strategically important companies in the global technology supply chain.
About ASML Stock
Headquartered in Veldhoven, Netherlands, semiconductor equipment giant ASML Holding is widely considered one of the most important companies in the global chip supply chain. ASML specializes in lithography systems used to manufacture advanced semiconductors, including its industry-leading extreme ultraviolet machines that are essential for producing cutting-edge AI and high-performance computing chips. ASML had a market capitalization of $642.2 billion, making it one of the most valuable technology companies in Europe.
ASML stock has seen a powerful rally over the past year as investor enthusiasm around AI infrastructure and advanced semiconductor manufacturing continues to accelerate. Shares of the Dutch chip equipment giant have risen 120.45% over the past 52 weeks, dramatically outperforming the broader market and cementing ASML’s status as one of the biggest beneficiaries of the AI spending boom. The stock is also up 52.63% year-to-date (YTD) in 2026, driven by strong demand expectations for extreme ultraviolet lithography systems that are essential for manufacturing next-generation AI chips.
Stock momentum intensified this week after a strong two-day rally. ASML shares rose 6.2% on May 20, boosted by reports highlighting tightening semiconductor supply conditions and continued strength in demand for AI-related chips, and UBS rated it its top European semiconductor pick. The rally continued on May 21, with the stock gaining another 2.7%.
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The stock appears to be trading at a premium to its industry peers at 42.91 times forward earnings.
Stable financial performance
ASML Holding delivered strong first-quarter 2026 results on April 15, as rising spending on AI infrastructure continued to drive demand for advanced semiconductor manufacturing equipment. The company reported first-quarter revenue of €8.8 billion ($10.2 billion), up 13.2% year-over-year from €7.7 billion ($8.9 billion) in the same period last year.
Net income rose to €2.8 billion ($3.3 billion) from €2.4 billion ($2.8 billion) a year earlier, while earnings per share (EPS) rose to €7.15 from €6 in the first quarter of 2025. Gross margin stood at 53%, compared to 54% in the prior-year quarter.
Additionally, ASML continued to see solid demand across its core business lines. Installed Base Management sales rose to €2.5 billion ($2.9 billion), while ASML sold 67 new lithography systems during the quarter. CEO Christophe Fouquet noted that “chip demand is outstripping supply,” and customers are raising short- and medium-term expectations for ASML equipment.
Meanwhile, ASML issued strong guidance for the second quarter, forecasting revenue of between €8.4 billion ($9.8 billion) and €9 billion ($10.5 billion) and a gross margin of between 51% and 52%. Additionally, the company raised its outlook for the full year 2026 and now expects annual revenue between €36 billion ($41.8 billion) and €40 billion ($46.5 billion). ASML also projected full-year gross margin in the range of 51% to 53%, indicating continued confidence in AI-powered semiconductor capex despite ongoing concerns over export controls and geopolitical risks.
Furthermore, the consensus EPS estimate of $37.10 for fiscal 2026 reflects an increase of 32.7%, while the EPS estimate of $48.06 for fiscal 2027 indicates a year-over-year increase of 29.5%.
What do analysts expect from ASML stock?
Analysts are showing optimism around ASML’s strong exposure to memory market demand, evident when UBS reaffirmed its “Buy” rating and raised its price targets to €1,900 from €1,600.
Additionally, Goldman Sachs raised its price target for ASML Holding to €1,600 from €1,570, while reiterating a “Buy” rating, citing strengthening fundamentals linked to the rise of AI-driven semiconductors.
Overall, ASML has a “Strong Buy” consensus rating. Of the 28 analysts covering the stock, 22 recommend a “strong buy,” two suggest a “moderate buy,” and four analysts remain on the sidelines, giving it a “hold” rating.
While analysts’ average price target of $1,694.78 suggests an upside of 3.8%, the Street’s high price target of $2,019 suggests the stock could rally as much as 23.7%.
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On the date of publication, Subhasree Kar had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
