Wall Street's Bold Case for ASML: How Analyst Forecasts Point to 70% Upside Potential

When major investment banks like Morgan Stanley put a bullish target on a semiconductor stock, the market takes notice. The firm’s recent analysis suggests ASML Holding could deliver substantial returns, with Wall Street analysts pointing to a compelling thesis grounded in fundamental industry shifts. The Dutch chipmaking equipment giant has already rewarded investors handsomely, climbing 75% over the past year, yet according to Morgan Stanley and other Wall Street observers, the best may still be ahead.

What’s driving such optimism from the Street? The answer lies in a powerful confluence of demand and supply dynamics that should keep ASML’s order book full for years to come.

The AI Boom Is Forcing Semiconductor Makers Into Capex Overdrive

The extraordinary demand for artificial intelligence chips has set off a cascade of capital spending across the semiconductor industry. Chipmakers and foundries are rushing to expand production capacity, and this spending spree directly benefits ASML, which manufactures the only equipment capable of producing the world’s most advanced chips.

Taiwan Semiconductor Manufacturing, the foundry powerhouse, provides a perfect example of this trend. TSMC just announced it will boost capital expenditure by 32% in 2026, reaching $54 billion based on the midpoint of guidance. More telling: the company will devote 70% to 80% of that spending toward advanced chip nodes—7-nanometer and below—precisely the products that only ASML’s extreme ultraviolet lithography machines can manufacture. This isn’t a one-time bump; it reflects structural changes in the industry.

The memory chip shortage adds another layer to the bullish story. High-bandwidth memory used in AI data center accelerators remains in tight supply, compelling companies like Micron Technology to expand aggressively. Micron plans to deploy $20 billion in capex this fiscal year, representing a 45% surge from the prior year. When industry giants like TSMC and Micron increase spending simultaneously, Wall Street knows what that means for equipment suppliers like ASML.

Industry group SEMI projects a robust 69% expansion in advanced chipmaking capacity through 2028, suggesting the capex wave will continue rolling well into the coming years.

Morgan Stanley’s Earnings Forecast Reveals the Profit Potential

Here’s where the numbers get interesting. Wall Street analyst consensus estimated ASML would finish 2025 with earnings of approximately $29.01 per share. While earnings growth is expected to moderate this year, Morgan Stanley sees a significant acceleration emerging in 2027.

The investment bank predicts ASML’s earnings could nearly double by 2027 compared to 2025 levels. Morgan Stanley’s specific forecast: 46 euros per share in 2027 earnings, which translates to roughly $53.85 per share using current exchange rates. This would represent earnings growth roughly double the consensus view, underscoring why Wall Street remains constructive on the stock.

If ASML trades at the technology sector’s average multiple of 44.7x earnings in 2027—a reasonable assumption given its growth profile—the math points to a potential stock price around $2,407. That would mean an 81% gain from current levels, materially exceeding Morgan Stanley’s 70% upside target.

Why This Bull Case Holds Water

Morgan Stanley’s optimism isn’t merely hopeful speculation. The thesis rests on a straightforward economic reality: the global chip industry needs ASML’s machines to meet exploding AI demand. There’s no substitute. As long as foundries and memory manufacturers must expand capacity—and market conditions suggest they will for years—equipment orders should remain robust.

The specificity of ASML’s technology moat is crucial. The company holds a virtual monopoly on EUV lithography equipment, the only technology capable of economically producing advanced semiconductor nodes. As chipmakers pour billions into capacity expansion, they have no choice but to buy from ASML.

Wall Street’s conviction is reinforced by concrete corporate actions. When TSMC commits to a 32% capex increase and memory manufacturers do the same, these aren’t marketing statements—they’re binding capital allocation decisions reflecting genuine market demand.

Considering the Risks Before You Invest

Despite the compelling fundamental setup, investors should approach ASML with appropriate caution. Even after its impressive 75% run-up, the stock carries execution risks, geopolitical uncertainties, and valuation considerations that warrant deliberation. The Street’s 70% forecast assumes many things go right—continued AI adoption, uninterrupted supply chain access, and sustained spending by customers.

ASML’s previous gains don’t guarantee future ones, and adding to a position after a 75% rally requires conviction in the longer-term thesis rather than momentum chasing. Wall Street’s enthusiasm is grounded in fundamental analysis, but individual investors should conduct their own diligence before committing capital.