There is no denying that we are in the middle of an artificial intelligence (AI) supercycle, characterized by persistently strong demand for products and/or services that typically exceeds supply.
From hardware to software, companies across different AI niches are struggling to meet end-market demand. Nvidia, for instance, is looking at a whopping $1 trillion in sales in 2026 and 2027 for its Blackwell and Rubin processors, and it is scrambling to procure enough production capacity to meet the massive customer orders.
Meanwhile, software specialist Palantir Technologies continues to sign contracts far larger than its revenue. On the other hand, the shortage of memory chips is well documented, with companies such as Micron Technology reportedly selling out their production capacities well in advance.
However, this AI supercycle wouldn't have been possible without ASML (ASML +2.05%). This Dutch company isn't a household name like the ones mentioned above, but it makes the machines powering the proliferation of AI. Let's look at the reasons why ASML could be the biggest winner of the AI supercycle.
Image source: ASML.
ASML is the ultimate beneficiary of massive AI spending
Significant spending on AI infrastructure, such as data centers and software solutions, will eventually drive ASML's growth. That's because it is the only company manufacturing extreme ultraviolet (EUV) lithography machines, which are essential for printing advanced chips based on small process nodes. Smaller process nodes enable chip designers, such as Nvidia, to create processors that are both powerful and power-efficient.
NASDAQ: ASML
Key Data Points
As AI workloads are compute-intensive and power-hungry, the advanced chips manufactured using ASML's EUV machines are critical to the growth of this technology. Not surprisingly, the Dutch semiconductor equipment giant saw remarkable demand for its machines. It received 28 billion euros worth of bookings last year, up from almost 19 billion euros in 2024.
Bookings refer to the sales orders for which ASML received written authorizations. Importantly, the bookings figure is likely to head higher in 2026 and beyond. That's because foundry giants such as Taiwan Semiconductor Manufacturing and memory manufacturers such as Micron and SK Hynix are poised to significantly increase their capital expenditures this year.
TSMC, for instance, is going to boost its 2026 capex by 33% from last year. Even better, the foundry giant is poised to spend 70% to 80% of its budget on advanced process nodes, suggesting it will likely place more orders for ASML's machines. Meanwhile, even Micron noted on its March earnings call that it will adopt more EUV machines.
As such, don't be surprised if ASML's growth outpaces market expectations.
The stock has solid upside potential due to its improving growth profile
ASML stock has jumped 117% over the past year. The good news is that its growth rate is poised to pick up, potentially paving the way for more upside.
Consensus estimates project a 20% increase in its earnings this year, followed by a 27% jump in 2027. That momentum could get better as ASML's next-generation EUV tools, which allow foundries to eliminate complexity and reduce manufacturing costs, reportedly carry a $400 million price tag. That's double the cost of the earlier EUV machines.
So, investors looking for a definitive way to capitalize on the AI supercycle would do well to buy this growth stock before it soars higher.
