ASML Shares Surge on Revised Targets and Sector Momentum

Significant analyst upgrades and confirmed capital expenditure plans from a major client are fueling a strong rally for ASML Holding NV's US-listed shares today. The positive sentiment centers on whether expectations for a renewed semiconductor upcycle will be reflected in the company's financial performance in the coming years.

A primary catalyst for the renewed optimism is the recent financial update from Taiwan Semiconductor Manufacturing Company (TSMC). Last Thursday, the world's leading contract chipmaker substantially raised its capital expenditure forecast for 2026, now projecting an outlay of $52 to $56 billion.

This planned budget significantly exceeds the $40.9 billion spent in 2025 and surpasses previous market expectations of approximately $45 to $48 billion. Crucially for ASML, TSMC intends to allocate 70% to 80% of this sum to advanced manufacturing technologies—the precise segment where ASML holds a monopoly with its extreme ultraviolet (EUV) lithography systems. These investments target capacity expansion for 2nm and A16 technologies to serve clients like Nvidia and Apple, providing ASML with greatly improved order book visibility over the next 18 months.

Morgan Stanley Lifts Price Target Substantially

In a major reassessment, Morgan Stanley has reaffirmed its "Overweight" rating on ASML while aggressively raising its price target. Analyst Lee Simpson, who also names ASML as the firm's "Top Pick," increased the target from €1,000 to €1,400 (approximately $1,540).

This bullish outlook is grounded in a stronger-than-previously-anticipated forecast for 2027. Simpson projects the company's most profitable year on record, estimating earnings per share of around €46. Key drivers supporting this view include:
* An anticipated recovery in demand from the foundry and memory sectors.
* Better-than-feared demand from China, providing a stable foundation.
* Continuously increasing demand for EUV lithography systems in Western markets.

The bank views the combination of solid Chinese demand and rising orders for high-end equipment as justification for the re-rating.

AI Investment Forecast Adds Sector Tailwinds

Further supporting the positive sector narrative, a new forecast from research firm Gartner projects global artificial intelligence (AI) spending to reach $2.52 trillion in 2026. This represents a 44% increase from the $1.76 trillion estimated for 2025.

Should investors sell immediately? Or is it worth buying ASML?

Gartner notes that "AI infrastructure" is expected to remain the largest spending category. This directly benefits the hardware supply chain, including the manufacturers of high-end chips produced using ASML's machinery. As major corporate clients transition from experimental AI projects to broad implementation, demand for high-performance chips is forecast to outstrip supply until at least 2027.

Revaluation Amid Talk of a "Super-Cycle"

This confluence of factors is prompting a broad revaluation of ASML. Several market analysts are now referencing a potential "semiconductor super-cycle." While the stock trades at a valuation premium to the industry average, its quasi-monopoly in key technologies is widely seen by institutional investors as justifying the multiple.

Analysts suggest the mix of TSMC's aggressive spending plans, resilient Chinese demand, and a global AI investment surge indicates that the cyclical slowdown feared for late 2025 has been superseded by a broader global expansion trend.

Other institutions are following suit. Bernstein Research recently also designated ASML a "Top Pick" with a $1,528 price target. Earlier in January, Aletheia Capital set a $1,500 target, similarly citing the dynamic investment activity of major chipmakers.

Focus Shifts to Upcoming Earnings Report

Market attention now turns to January 28, when ASML is scheduled to release its fourth-quarter and full-year results. The order intake, particularly net bookings, will be a critical focal point. Morgan Stanley anticipates a positive surprise here, which could immediately bolster the optimistic view for 2027.

From a technical perspective, the US-listed shares are trading near all-time highs. A closing price decisively above the $1,360 level would confirm an upward breakout from a charting standpoint, potentially opening a path toward the new price targets around $1,500 and above. Coupled with TSMC's confirmed investment roadmap, the current environment is one where the upward trend appears firmly in control.