The artificial intelligence (AI) supercycle is driving unprecedented demand across the tech sector, with companies like Nvidia and Palantir struggling to keep up with customer orders. Nvidia anticipates $1 trillion in sales for its upcoming processors, while Palantir’s contract sizes are outpacing its current revenues. However, the backbone of this AI boom lies with ASML, the sole manufacturer of extreme ultraviolet (EUV) lithography machines essential for producing advanced chips.

ASML is positioned to benefit significantly from the surge in AI infrastructure spending, as foundries like TSMC and memory chipmakers such as Micron ramp up their capital expenditures. TSMC plans a 33% increase in 2026 capex, with a focus on advanced process nodes, which will likely lead to more orders for ASML’s machines. The company has already seen a jump in bookings, reaching €28 billion last year, and projections suggest further growth.

Investors should consider ASML as a key player in the AI supercycle, especially given its stock’s 117% rise over the past year and anticipated earnings growth of 20% this year, followed by 27% in 2027. With the demand for its next-generation EUV tools expected to increase, ASML presents a compelling opportunity for those looking to capitalize on this transformative market trend.

Source: fool.com