Bernstein sees further gains for ASML after semiconductor stock doubles in a year

ASML Holding has more than doubled over the past 12 months, and Bernstein’s analysts think the party isn’t over. The firm maintains a bullish outlook on the Dutch semiconductor equipment maker, citing AI-driven demand as the engine behind what they believe is a rally built on earnings, not hype.

Analyst David Dai has identified ASML as a top pick among European semiconductor stocks, a distinction that carries weight given the company’s already eye-popping run.

The EUV monopoly advantage

The company holds a near-monopoly in extreme ultraviolet lithography, the technology required to manufacture chips at process nodes below 7nm. If you want to build the most advanced semiconductors on the planet, you need ASML’s machines. There is no viable alternative.

That means every major foundry chasing AI compute capacity, whether it’s TSMC, Intel, or Samsung, is writing checks to the same company. When the entire industry simultaneously decides it needs more advanced chip manufacturing capability, ASML doesn’t compete for the business. It simply processes the orders.

The demand isn’t limited to one category, either. Both memory and logic chip manufacturers are expanding capacity, and both need ASML’s equipment to do it.

Why Bernstein thinks there’s more runway

Bernstein asserts that the semiconductor rally is supported by actual earnings growth rather than inflated valuations. A stock doubling on multiple expansion is a red flag. A stock doubling because the underlying business is genuinely earning more money is a fundamentally different situation.

Bernstein’s forecast of additional price increases reflects a view that the current demand trajectory has durability. The firm sees ASML’s order book as evidence that the AI spending cycle has legs beyond what the current stock price reflects.

David Dai’s designation of ASML as a top European semiconductor pick also positions the stock favorably for investors looking to diversify their AI exposure beyond the usual US suspects.

What this means for investors

There are risks, naturally. Geopolitical tensions around semiconductor export controls could limit ASML’s ability to sell to certain markets, particularly China. Currency fluctuations between the euro and dollar can affect reported results. And any slowdown in AI capital expenditure by major cloud providers would immediately hit ASML’s order book.

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