ASML stock price surged more than 60% in 2026: How will AI chip demand reshape global lithography machine dominance?

On July 16, 2026 (Beijing time), ASML Holding NV (ASML) shares were quoted at €1,584.40, up 60.64% year-to-date. Among Nasdaq 100 index constituents, the Dutch lithography equipment giant ranks among the best-performing stocks. The core engine driving this rise is a surge in demand for advanced chip manufacturing equipment brought about by the continued expansion of investment in AI infrastructure.

This is not a typical upswing in a semiconductor cycle. The demand fluctuations in the smartphone and personal computer era are fundamentally different from the structural shift driven by today’s AI compute race. As technology giants such as Nvidia, AMD, Google, and Amazon continue to ramp up their purchases of AI chips, and TSMC, Samsung, and Intel race to push mass production and R&D of 3-nanometer, 2-nanometer, and even more advanced process nodes, a key industrial logic is becoming clear: the end point of AI competition is not only a contest of model capabilities, but also a contest of advanced chip manufacturing capabilities. In this race, ASML controls the world’s most core manufacturing equipment—extreme ultraviolet (EUV) lithography machines.

ASML’s Big Jump in 2026: A Double Drive of Beating Earnings Expectations and AI Demand

On July 15, 2026, ASML released its second-quarter financial results, with core indicators surpassing market expectations across the board. Net sales for the quarter reached €9.33 billion, exceeding analysts’ average expectation of €8.85 billion; net profit was €2.92 billion, higher than the market expectation of €2.64 billion; and gross margin came in at 54%, also above the expected 52%. On a year-over-year basis, revenue grew 21%, while net profit grew 27%.

What truly energized the market, however, was not just the single-quarter figures, but the company raising its full-year performance guidance for the second time during the year. ASML raised its 2026 full-year net sales outlook from €36-40 billion three months earlier to €43-45 billion. The midpoint of €44 billion was about 11% higher than the market’s widely held expectation of €39.6 billion. Gross margin guidance was also raised in parallel from 51%-53% to 54%-56%. The third-quarter outlook was similarly strong: revenue is expected to be €11-12 billion, and gross margin 55%-57%.

ASML CEO Christophe Fouquet said in the earnings statement: “Ongoing AI-related investments and continuous progress in AI technology are driving demand for advanced logic chips and memory chips, further strengthening the growth outlook for the semiconductor industry. Our customers, in turn, are also continuously accelerating their capacity expansion plans.”

From a view of business structure, the boost from AI demand to ASML is not a one-dimensional story. The company expects equipment sales related to advanced logic and foundry wafer manufacturing in 2026 to grow by more than 25%, while system sales related to memory are expected to grow by more than 75%. The explosive growth in demand for memory-chip equipment is especially worth noting. High-bandwidth memory (HBM), a key component for AI accelerators, is driving large-scale capacity expansion by memory giants such as SK hynix and Samsung. ASML’s EUV lithography machine orders have been extended through 2028. Fouquet further noted that customers have signed long-term agreements not only with ASML, but also with their own customers; “this gives them unprecedented market visibility, which leads them to make long-term commitments.”

EUV Lithography Machines: The Semiconductor Industry’s Deepest Moat

ASML’s valuation premium is rooted in an almost non-replicable monopoly—it is the only company in the world that can mass-produce extreme ultraviolet (EUV) lithography machines.

EUV lithography machines use a beam with a wavelength of just 13.5 nanometers to etch microscopic circuit patterns onto silicon wafers. This equipment is an essential tool for producing advanced-process chips below 3 nanometers—from Nvidia’s H100 to AMD’s Instinct series. Before each advanced AI processor enters data centers, it must go through machines from ASML.

The manufacturing difficulty of EUV equipment is extremely high. A single unit is roughly the size of a school bus, with an assembly cycle lasting as long as several months and involving hundreds of suppliers. Each unit is priced between $200 million and $400 million. ASML shipped its first EUV prototype in 2006, but only delivered the first system capable of mass production in 2013. More than 20 years of technical accumulation and astronomical R&D spending have built barriers that competitors can hardly cross.

ASML’s main customers—TSMC, Samsung, and Intel—have all built wafer fabs around EUV technology. This deep entrenchment means the cost for customers to switch suppliers is extremely high—one could even say there is no viable alternative. Morningstar analysts expect ASML to maintain its leading position for at least the next decade or longer.

On the competitive front, Canon’s nanoimprint technology can produce circuits with comparable precision, but its error rate is far higher than EUV’s, making it unsuitable for mass production of advanced computing chips. Nikon has launched price competition in the DUV space to try to challenge ASML, but in EUV it still has no substantive breakthrough. As ASML CEO has said, no one is currently able to shake its monopoly position in EUV.

The AI Wave Reshapes ASML’s Order Cycle and Demand Logic

To understand ASML’s current growth, you first need to understand the structural changes in its demand transmission chain.

In the past, the semiconductor cycle was driven by smartphones and personal computers. Demand originated from end devices, flowed to chip design companies, then to foundries, and finally reached equipment suppliers. Every link involved inventory adjustments and demand fluctuations, and the cycle showed clear peak-and-trough characteristics.

In the AI era, the demand transmission chain is completely different. AI servers need GPUs, and GPUs depend on advanced process nodes; advanced nodes rely on EUV lithography machines. Meanwhile, GPUs also need high-bandwidth memory (HBM) to work effectively, and HBM likewise depends on EUV-based manufacturing processes. Every link in this chain is expanding at the same time.

The transmission mechanism can be summarized as:

AI compute demand continues to rise → demand for advanced logic chips and HBM rises in parallel → wafer fabs (TSMC, Samsung, SK hynix) significantly increase capital expenditures → ASML’s EUV and DUV equipment orders continue to grow

ASML CFO Roger Dassen said on the earnings call: “In the current environment, as long as customers can improve productivity, they will adopt whatever measures—especially solutions that can raise productivity immediately.”

The strength of this transmission chain is reflected in ASML’s capacity planning. For the first time, the company clearly disclosed its capacity expansion blueprint for 2027-2028: low numerical aperture EUV capacity will increase from about 65 units in 2026 to 30% more—about 85 units—in 2027, and then another 30% to about 110 units in 2028; immersion DUV capacity will rise from about 130 units in 2026, with increases of 30% in both 2027 and 2028. A Goldman Sachs research report pointed out that this expansion schedule is significantly ahead of market consensus expectations.

At the same time, ASML’s installed base business also forms a stable source of revenue, accounting for about 30% of net revenue, and growing at a double-digit quarter-over-quarter pace. Software and hardware upgrades, as well as maintenance services for installed equipment, provide ASML with recurring revenue that does not depend on new machine sales.

Risk Variables Behind the Growth

Beyond the optimistic sentiment, ASML’s future growth faces several risks that cannot be ignored.

Uncertainty in the China market is the most core geopolitical variable. In the fourth quarter of 2025, China accounted for 36% of ASML’s net system sales. However, due to U.S. export controls, the company expects China’s revenue share in 2026 to fall to about 20%. It is worth noting that the main risks are not only from EUV equipment that is already restricted, but also from potential future tightening measures that could apply to advanced DUV systems, spare parts, and services. The MATCH bill proposed by the U.S. Congress in April aims to place all DUV lithography machines on a restriction list. The Dutch government has carried out intensive diplomatic lobbying on this matter, but the outcome remains uncertain.

Volatility in the semiconductor cycle is also something that cannot be overlooked. Although AI demand is currently strong, the inherent cyclical nature of the semiconductor industry has never disappeared. If AI capital expenditures slow down temporarily or the market reassesses the return on AI investment, ASML’s order visibility could be affected. However, current customers have already signed a large number of long-term agreements and paid upfront deposits, which to some extent smooths the risk of short-term volatility.

Pressure on the valuation is also worth paying attention to. ASML’s current forward P/E ratio is about 50x. Some analysts believe a reasonable valuation range should be 35-40x. InvestingPro’s analysis shows the current share price is already above its estimated fair value. However, after the earnings reports, multiple investment banks—including Goldman Sachs, JPMorgan, and Bank of America Securities—still maintained “buy” or “add” ratings, with target prices set at €2,000, €1,900, and €2,022, respectively. Bernstein even raised its target price to $2,623. This divergence among institutions in itself reflects the ongoing market debate about whether ASML’s valuation is reasonable.

In addition, news that ASML plans to raise equipment prices has also attracted market attention. According to media reports, some Chinese chipmakers have accepted DUV equipment price increases, but TSMC—the largest customer—has opposed the price increase plans. Although ASML CFO said the company has “ample room” to raise prices further, the risk of customer concentration—especially reliance on TSMC—remains a long-term concern.

Conclusion

ASML’s strong performance in 2026, in essence, reflects a deeper industrial reality: the AI race has moved beyond the level of algorithms and models and has sunk into the infrastructure layer of chip manufacturing. In this race, EUV lithography machines are no longer ordinary equipment purchases, but strategic infrastructure within the advanced chip supply chain.

For investors, ASML provides a unique allocation logic—it is not a bet on any single chip design company or a particular type of end product, but exposure to the expansion of the entire AI compute infrastructure. As long as AI compute demand continues to grow, wafer fabs will have sustained motivation to expand capacity, providing sustained support for continued growth in ASML’s orders.

But as with all deep-tech investments, geopolitics, cyclical volatility, and valuation disagreements create unavoidable constraint conditions. ASML’s long-term value depends on the answer to one core question: is investment in AI infrastructure an irreversible structural transformation, or just a capital expenditure cycle that will eventually ebb? Judging from current order visibility, customers’ long-term agreements, and capacity expansion plans, the weight of the former is continuously increasing.

FAQ

Q: What are the main reasons for ASML’s share price increase in 2026?

The core driving force behind ASML’s share price increase is a surge in advanced-process equipment orders fueled by a breakout in AI chip demand. The company’s 2026 second-quarter earnings report beat expectations across the board: both revenue of €9.33 billion and net profit of €2.92 billion were significantly higher than market expectations. At the same time, the company raised its full-year revenue guidance for the second time during the year to €43-45 billion. As the global monopoly position of the only EUV lithography supplier in the world makes it one of the biggest beneficiaries of the expansion of AI compute infrastructure.

Q: Why is ASML’s EUV lithography moat difficult to break?

ASML is the only company in the world that can mass-produce EUV lithography machines. The R&D cycle for EUV technology exceeds 20 years; a single machine costs $200-400 million; and it involves complex coordination among hundreds of suppliers. Competitor Canon’s nanoimprint technology has an error rate that is too high and is not suitable for mass production of advanced computing chips; Nikon still has no substantive breakthrough in EUV. ASML’s main customers—TSMC, Samsung, and Intel—have built wafer fabs around ASML’s technology, resulting in extremely high switching costs.

Q: How has the AI wave changed ASML’s demand cycle?

In the past, the semiconductor cycle was driven by smartphones and PCs and showed clear peak-and-trough characteristics. In the AI era, the demand transmission chain is: AI compute demand increases → GPU/HBM demand increases → wafer fabs’ capital expenditures increase → ASML equipment orders increase. Each step in this chain expands in sync, extending ASML’s order visibility significantly through 2028. The company has therefore launched an aggressive capacity expansion plan, with EUV and DUV capacity both increasing by 30% in 2027-2028.

Q: What major risks will ASML face for future growth?

Major risks include: the China market, affected by U.S. export controls, is expected to see its revenue share fall from 33% in 2025 to about 20% in 2026; inherent cyclical volatility in the semiconductor industry may affect the sustainability of AI capital expenditures; the current forward P/E ratio of about 50x is too high, and some analysts think the reasonable range is 35-40x; and concentration risk stemming from reliance on a small number of major customers such as TSMC.