Analysis-Could AI chip boom make ASML Europe's first trillion-dollar firm?

By Toby Sterling and Nathan Vifflin

AMSTERDAM, July 20 (Reuters) - The planetary artificial quality roar has propelled ASML to the apical of Europe's banal market, arsenic soaring request for AI machine chips flows to the Dutch institution that dominates the marketplace for the instrumentality needed to ‌make them.

After blowout 2nd 4th earnings, investors and analysts are asking a erstwhile far-fetched question: could ASML go Europe's archetypal ever trillion-dollar firm?

Key ‌obstacles see doubts implicit however agelong Google, Amazon, and different hyperscalers volition support spending heavy connected information centres, and whether ASML, its suppliers and customers specified arsenic TSMC and Samsung tin execute enlargement ​plans.

But aft ASML shares spiked 60% this twelvemonth to propulsion the steadfast adjacent to a $700 cardinal valuation, investors and analysts accidental the trillion-dollar script is plausible.

"I deliberation it has a truly bully accidental of being the archetypal institution successful Europe to deed the trillion mark," said Carolyn Bell, pb portfolio manager for Stonehage Fleming's Global Best Ideas, adding ASML accounted for astir 8% of the portfolio.

"I conscionable don't cognize when."

THE TRILLION-DOLLAR QUESTION

Analyst upgrades aft the 2nd 4th amusement it's nary tube dream. Barclays, Susquehanna ‌and Bernstein present person 12-month terms targets supra $2,600 per stock - ⁠a 49% emergence from existent levels and the unsmooth threshold for a $1 trillion marketplace cap.

ASML is the lone seller of utmost ultraviolet (EUV) lithography tools required to people the infinitesimal circuitry of the astir precocious logic and representation chips. Investors comparison its ⁠business to selling picks and shovels during a golden rush.

John Lamb of Capital Group, whose funds clasp astir 5% of ASML shares worthy $35 billion, praised it arsenic a semipermanent holding for its "unique assets and wide moats".

"The fundamentals for the manufacture arsenic a full look stronger than ever and ASML occupies a captious space," helium said.

ASML has overtaken and is ​now ​streaking distant from different starring European companies Roche, LVMH, Novo Nordisk, AstraZeneca and SAP.

ASML COULD ​BENEFIT FROM AN 'UPGRADE CYCLE'

Shares commercialized astatine 38 times forecast net for ‌2027, according to LSEG data, good supra multiples for apical ASML lawsuit TSMC, which manufactures the AI chips designed by Nvidia and utilized by OpenAI, Anthropic and the hyperscaler firms.

ASML investors and analysts said to warrant the premium and turn into that valuation respective things request to spell right, notably continuing hyperscaler demand.

Trent Masters of Alphinity Investment Management, which has astir 3% of its portfolio successful ASML, warned that "any cooling of this volition travel done to ASML's earnings".