ASML Stock: Morgan Stanley Projects 70% Upside in Bull Case Scenario

TLDR

• Morgan Stanley names ASML as a top stock pick with a bull case target of €2,000, representing a 70% upside from current levels.
• TSMC announced a $56 billion capital expenditure budget for 2026, a 37% increase from 2025, driving strong demand for ASML’s equipment.
• ASML’s market value surpassed $500 billion this week, becoming only the third European company to reach this milestone.
• Morgan Stanley expects ASML’s earnings to nearly double by 2027, reaching approximately €46 per share from 2025 levels.
• A U.S.-Taiwan trade agreement includes $500 billion in financing for Taiwanese semiconductor companies to build American facilities, boosting future ASML orders.

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ASML Holding stock has been on a tear to start 2026. The Dutch chipmaker’s shares climbed 25% year-to-date as of Friday.

ASML Holding N.V., ASML

The stock advanced another 1.2% to €1,163 on Friday morning. This momentum pushed ASML’s market capitalization past the $500 billion mark.

Only two other European companies have ever reached this valuation threshold. The rally comes as Morgan Stanley doubled down on its bullish outlook for the semiconductor equipment maker.

The investment bank named ASML one of its top stock picks. Analysts led by Lee Simpson pointed to several factors driving their optimism.

Taiwan Semiconductor Manufacturing Company provided the biggest catalyst. TSMC announced plans to spend up to $56 billion on equipment in 2026.

This represents a 37% jump from 2025 levels. As ASML’s largest customer, TSMC’s spending directly translates to order volume for the Dutch firm.

Earnings Expected to Double

Morgan Stanley’s base case calls for ASML shares to hit €1,400. That price target ranks as the second-highest among Wall Street analysts tracking the stock.

The bull case scenario gets more interesting. Under the most optimistic conditions, Morgan Stanley sees shares reaching €2,000.

That would represent a 70% gain from current trading levels. The projection assumes tech valuations continue rising and profits exceed expectations.

Earnings growth forms the backbone of this thesis. Morgan Stanley forecasts ASML will generate approximately €46 per share in 2027.

That figure nearly doubles the company’s 2025 earnings. The profit surge stems from relentless demand for ASML’s specialized lithography machines.

These tools are essential for manufacturing cutting-edge chips. ASML’s High-NA EUV machines cost over $350 million each.

They’re the only equipment capable of producing 2-nanometer and 1.6-nanometer chips. Modern AI data centers rely on these advanced semiconductors.

Trade Deal Adds Long-Term Support

A recent U.S.-Taiwan trade agreement provides another boost. The pact includes $500 billion in financing and credit guarantees.

These funds will help Taiwanese semiconductor companies expand American operations. TSMC and other firms plan to build new fabrication facilities in states like Arizona.

Each new facility requires multiple ASML machines. The trade deal essentially locks in years of future orders.

Memory chip demand offers a secondary growth driver. Rising prices for memory chips are prompting capacity expansions.

Memory manufacturers need ASML’s equipment for these buildouts. High Bandwidth Memory for AI accelerators creates additional demand.

China sales have also exceeded expectations. ASML’s revenue from Chinese chipmakers came in better than analysts feared.

Morgan Stanley analysts wrote that higher 2027 foundry and memory spending drives their conviction. Better-than-expected China demand adds to the positive outlook.

ASML shares opened Friday’s pre-market session at $1,355.07. The consensus rating among analysts stands at Strong Buy based on eight buy ratings, one hold, and zero sells.

The average 12-month price target sits at $1,462.57, suggesting 9.8% upside potential from current levels.

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