ASML Becomes Biggest Company in European History

Being the first link in the supply chain has its benefits.

So it’s no surprise that ASML became Europe’s most valuable company ever on Wednesday, surpassing a record previously held by Novo Nordisk.

Lith or Lithout You

In case anyone needs an AI supply chain refresher, ASML holds a virtual monopoly on the extreme ultraviolet (EUV) lithography machines used by TSMC and other chip fabs to make the semiconductors (often designed by Nvidia) that AI firms like OpenAI and Anthropic use to train and run their models. Being at the starting line of the great AI race has carried ASML’s share price nearly 50% higher so far this year. But that actually underperforms major peers (the sector-tracking Invesco PHLX Semiconductor ETF, for instance, has gained 95%), and its $668 billion market cap, while the largest ever in Europe, is short of the trillion-dollar threshold that’s practically ho-hum for top players downstream in the supply chain.

However, analysts at both JPMorgan and Morgan Stanley published quite similar notes on Wednesday, arguing the stock still has plenty of room to grow, sparking the rally that minted the new record:

• Analysts at both banks argued that it is likely easier (and cheaper) than anticipated for ASML to increase production capacity to meet high demand in the coming years; both notes projected ASML could ship as many as 90 EUV machines in 2027, up from the 80 machines that the company recently projected.
• Subsequently, analysts at both banks raised their price targets for ASML shares. The endorsements come just weeks after a similar action by UBS analysts, who named the stock a “top pick.”

Head Start: Whether ASML can maintain its monopoly status is a hotly debated question. Huawei, for instance, has recently begun touting a possible workaround to ASML’s equipment; the Peter Thiel-backed San Francisco-based startup Substrate has raised $100 million to try to crack the lithography code and Nikon recently burst into the market with a lower-end product. When asked about potential competitors by TechCrunch last month, ASML CEO Christophe Fouquet said he didn’t see his company’s considerable moat drying up soon: “Wanting to have it and having it — that’s still a huge difference … When you start from scratch, the challenge is enormous.”