Why ASML Saw a Surge on Monday

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On Monday, ASML’s stock rose by a robust 6.6%, a significant rally that stood in stark contrast to its relatively lackluster performance earlier this year. This surge can be attributed to a much-needed upgrade from a sell-side analyst, issued late Friday, which came in tandem with increasingly optimistic data concerning the artificial intelligence (AI) sector. These developments have lifted the stock well above the general market trends.

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Arete’s Upgrade After Seven Long Years

Arete Research, a smaller but respected equity research firm that has been covering technology, media, and telecommunications since 2000, has been tracking ASML since 2018. For the first time in seven years, Arete has upgraded the company’s stock from “hold” to “buy,” placing a price target of 879 euros. This comes as ASML currently trades near that target in U.S. dollars but is priced at 729.40 euros as of this writing. The research firm points to the anticipated surge in spending by Taiwan Semiconductor Manufacturing (TSMC), which, according to Arete’s estimations, will pour $50 billion into capital expenditures in both 2026 and 2027, up from a revised $38 to $42 billion this year.

While ASML’s prospects are looking up, the company’s valuation remains a point of interest. It may not be cheap by any means, but it’s one of the most attractively priced semiconductor stocks in the market. This is especially true considering the unflattering questions raised earlier this year about ASML’s business in China, as well as the short-term emphasis on etch and deposition technologies rather than lithography. The uncertainty surrounding these factors had cast a shadow over its valuation, but even so, ASML still controls a critical niche.

The Fading Fears from Early Summer

This summer, ASML investors were unsettled by the company’s cautious outlook for 2026, with warnings about potential growth stagnation tied to uncertain tariff policies and the unpredictability of non-TSMC clients. But it appears the winds have shifted. AI spending is proving to be even more vigorous than anticipated, bolstered by a series of positive data points regarding AI investments. The stock, which had hit its lowest valuation in a decade, has started to climb again. This turnaround is not only due to AI’s meteoric rise but also because of ASML’s monopoly on extreme ultraviolet (EUV) lithography-a technology essential for producing advanced chips and DRAM memory, the very building blocks of AI systems.

With the increasing demand for cutting-edge logic and DRAM chips, it was almost inevitable that ASML’s stock would eventually rise from its slump. Its EUV technology is irreplaceable in the production of these components, making it a linchpin in the AI ecosystem. The recent optimism surrounding AI investments has reaffirmed that ASML is well-positioned to benefit from this rapidly expanding market.

The stock may no longer be the underdog in the semiconductor race, but it’s now poised to maintain its dominance-thanks in no small part to its technological monopoly and the unstoppable force of AI’s advancement. And as the hype around this sector grows, ASML’s position in the market will likely continue to improve, even if it remains subject to the usual market fluctuations.

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2025-09-16 00:17