Key Points
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Investment in cutting-edge semiconductor manufacturing machinery is projected to rise significantly over the next five years because of artificial intelligence.
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ASML produces machinery that enables clients to reduce the size of their chips, enhancing their performance and effectiveness.
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A favorable price and strong potential for earnings growth make this semiconductor stock a good purchase at this time.
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10 stocks that are more favorable than ASML ›
ASML Holding (NASDAQ: ASML)is among the most significant players in the global semiconductor sector. The Dutch semiconductor equipment leader produces machines that are essential in assisting chip manufacturers and foundries in creating cutting-edge chips.
However, ASML stock has remained quiet since reaching a record high on July 8 last year. It has lost 11% of its value since then, while the broaderPHLX Semiconductor SectorThe index has increased by 10% during this time. ASML’s underperformance since July of last year may be due to the possible impact oftariffson the sale of the company’s equipment, along with its less favorable than anticipated outlook for 2025.
The positive aspect is that ASML stock has begun to show some upward movement recently. The stock has increased by 27% over the past month, driven by favorable comments from Wall Street and the strong performance of the semiconductor industry due to high demand forartificial intelligence (AI)chips. It’s not unexpected to witness ASML maintaining this trend and providing strong returns to shareholders in the coming three years.
Let’s see why this semiconductor stockis prepared for additional growth by 2028.
Artificial intelligence is expected to boost increased investment in semiconductor manufacturing equipment
The rise of AI has been a key factor in boosting semiconductor demand during the past three years. The outlook for the next three years also appears positive, withAdvanced Micro DevicesCEO Lisa Su predicts that sales of AI accelerator chips, such asgraphics processing units (GPUs)and specialized processors are expected to grow by 60% each year until 2028, leading to a huge $500 billion in yearly revenue.
It’s not unexpected to witness this occurrence, considering the rapid growth in the demand for AI computing in the cloud. Cloud infrastructure providers such asOracle, Microsoft, Google, and Amazon not enough data center resources availableavailable to them to address customer needs for training and implementing AI models, or for executing inference applications in the cloud.
This has resulted in a significant order backlog for the top cloud computing companies. For example, the total backlog of Amazon, Microsoft, and Google reached an impressive $669 billion by the end of the last quarter. Oracle recently announcedremaining performance obligations (RPO)valued at a staggering $455 billion, representing a significant increase of 359% compared to the same period last year.
Therefore, these major cloud companies currently have a revenue backlog exceeding $1 trillion that they must address. This is the primary reason why investment in chip manufacturing equipment is anticipated to rise over the next three years, as these firms are expected to continue allocating substantial funds toward building data center infrastructure. This will generate a higher need for chips, which will subsequently result in increased demand for the chip manufacturing equipment produced by ASML.
It’s important to note that the chips designed for handling AI tasks—whether in data centers, personal computers, or smartphones—are produced using cutting-edge process technologies. These advanced nodes enable the creation of chips with very small transistor sizes, typically under 7-nanometers. Unsurprisingly, top chip manufacturers arehoping to reduce the size of their chipsto enhance computational efficiency and lower power usage at the same time.
ASML is the sole provider capable of assisting semiconductor manufacturers in producing smaller chips through its high NA (numerical aperture) extreme ultraviolet (EUV) lithography systems, which are able to create chips as small as 2nm. This is why companies like SK Hynix,Inteland Samsung have been waiting to buy ASML’s high NA machines in an effort to reduce the size of their process nodes and produce advanced chips.
ASML’s dominant presence in the EUV lithography market accounts for the anticipated surge in demand for its equipment. According to S&P Global, ASML’s EUV sales are projected to increase by a notable 49% this year, with continued growth in unit volumes and average selling price (ASP) expected through the end of the decade.
The industry group SEMI anticipates that investments in equipment used to manufacture cutting-edge chips will surpass $50 billion by 2028, marking a significant rise from the $26 billion spent in the previous year. This trend may lead to considerable growth opportunities in the coming three years.
ASML might prove to be a strong investment over the next three years.
The arguments presented above indicate that ASML is positioned to achieve strong growth in the coming three years. Its profit growth is anticipated to rise significantly in 2028, after a projected low-single-digit increase in the following year.
It’s important to note that ASML’s net income has risen by 67% during the first six months of 2025 compared to the same timeframe in the previous year. Considering the company is anticipated to see a significant increase in the average selling price of its EUV machines in the coming three years, particularly the high-NA models, there is a strong possibility it may achieve greater growth than currently predicted by analysts.
Assuming it could achieve earnings of $40 per share in 2028 and is trading at 33 times earnings after three years (consistent with the tech-heavy market)Nasdaq-100index), its stock price might reach $1,320. This would represent a 38% rise from present values. However, you shouldn’t be taken aback to witness this.AI stockgenerating significantly higher returns. The market might offer a higher valuation due to the possibility of faster growth.
Is it a good idea to invest $1,000 in ASML at this moment?
Before purchasing shares in ASML, take this into account:
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Harsh Chauhandoes not hold any positions in the stocks listed. The Motley Fool holds positions in and suggests ASML, Advanced Micro Devices, Amazon, Microsoft, and Oracle. The Motley Fool recommends the following options: buying January 2026 $395 call options on Microsoft and selling January 2026 $405 call options on Microsoft. The Motley Fool has adisclosure policy.
