Shares of ASML (ASML 0.20%) were moving higher today, continuing a recent rally in the stock, this time in response to news of Nvidia's $5 billion investment in Intel and a new partnership between the two semiconductor heavyweights.
One analyst hiked their price target on the news as well, showing that the deal is bullish for ASML.
As of 11:58 a.m. ET, the stock was up 7% on the news.
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ASML rides Intel's coattails
ASML, which is the only manufacturer of extreme ultraviolet lithography (EUV) to make semiconductors, counts Intel, one of the world's biggest chip manufacturers, as a major customer, along with TSMC and Samsung, though Intel has struggled badly in recent years.
The thinking seems to go that the Nvidia partnership could breathe new life into Intel, boosting its foundry and creating new demand for ASML, though the deal doesn't directly focus on Intel Foundry.
In response to the news, Bank of America raised its price target from $724 to $941 and reiterated a buy rating on the stock, noting that a more competitive Intel should be a positive for semiconductor equipment companies.
Can ASML keep gaining?
After missing out on the AI rally over much of the past year, ASML is finally gaining traction, as investors have responded positively to recent news, including its deal to take a stake in Mistral AI for 1.3 billion euros, and signs that TSMC is increasing its capital expenditures budget.
ASML has a strong competitive advantage in semiconductor equipment, but it needs demand from its customers. As we move further into the artificial intelligence (AI) era, signs are picking up that demand could be returning.
