Shares of semiconductor lithography specialist ASML Holding (ASML 1.48%) have more than doubled over the last year -- crushing the performance of the broader tech sector and Nasdaq Composite. At $1,410 per share at the time of this writing, ASML would need to gain around 42% to surpass $2,000 per share, and 81% to become the first European company to surpass $1 trillion in market capitalization.
Here's why ASML's investment thesis is stronger than ever, and what could hold the tech stock back from surpassing $2,000 per share.
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ASML's blowout results
ASML reported its first-quarter 2026 earnings on April 15, and the results couldn't have been much better. ASML delivered 8.8 billion euros in net sales, 53% gross margins, and 2.8 billion euros in net income for a net profit margin of 31.8%. It also raised its full-year guidance to 36 billion-40 billion euros in net sales and gross margins between 51% and 53% -- representing year-over-year sales growth around 16.2% at the midpoint.
The company's lithography systems play an integral role in artificial intelligence (AI) infrastructure investment. Lithography is arguably the most complex and important step in the fabrication of AI chips. And ASML has a virtual monopoly on extreme ultraviolet (EUV) machines, which allows manufacturers like Taiwan Semiconductor Manufacturing, Samsung Electronics, and Intel to support next-generation designs of highly advanced chips, like those made by Nvidia, Broadcom, Advanced Micro Devices, and Micron Technology.
ASML continues to see increased demand for advanced logic chips and memory. ASML CEO Christophe Fouquet said the following on the first-quarter 2026 earnings call:
So if we look at memory, what our customers tell us is that they are sold out for 2026. And their supply constraints will last beyond 2026. For advanced logic, we see our customers building capacity for several nodes, while they also continue to ramp 2 nm in order to address the AI products.
ASML said that memory and logic customers are ramping up their capital expenditures for 2026 and beyond, supported by long-term customer commitments. However, ASML is still early in mass-producing its EUV systems, especially its most advanced high-numerical-aperture (High NA) versions. In Q1, ASML sold just 2 High-NA EUV systems.
For 2026, ASML is forecasting production of 60 Low-NA EUV systems. In fact, Low-NA EUV is driving the bulk of ASML's current performance. In Q1, ASML had 8.8 billion euros in net sales, of which 46.6% were EUV systems, 23.9% was non-EUV systems, and 28.4% was servicing its existing installed base.
NASDAQ: ASML
Key Data Points
ASML is an innovation machine
The long-term bull case on ASML centers on the fact that the company is still relatively early into high-volume production and delivery of High-NA EUV systems. And given that next-generation fabs will need these machines to produce cutting-edge chips, ASML effectively has a multiyear runway for steady, high-margin growth.
Management outlined this roadmap in its Q1 2026 earnings presentation through high-volume manufacturing of its existing High-NA EUV systems, as well as more advanced systems in development extending out to 2033 to handle even more advanced logic and memory manufacturing processes.
ASML's business model is perfectly built to fund multibillion-dollar research and development efforts. Sales from servicing its installed base alone were more than double its research and development costs in its latest quarter.
Returning capital to shareholders
Despite record R&D spending, ASML's overall earnings growth leaves plenty of cash leftover to return to shareholders. In its Q1 earnings release, ASML announced a planned 17% increase in its dividend. It bought back 7.6 billion euros in stock from 2022 to 2025, including a whopping 1.7 billion euros in the fourth quarter of 2025. ASML is accelerating its buybacks, with a new 12 billion euro program from 2026 through 2028. Already, it executed 1.1 billion euros in buybacks in Q1 2026.
Buying back stock helps reduce the share count and more than offset stock-based compensation -- making ASML a better value for long-term investors. And although ASML isn't a high-yield stock by any means, the growing dividend is an added benefit for long-term investors seeking passive income without selling shares.
ASML remains a buy for long-term investors
ASML is a foundational AI stock to build a portfolio around. Management just outlined why near-term demand continues to outpace supply, and why ASML is incredibly well positioned to lead lithography innovation over the long term. The company continues to operate with high margins and grow sales and earnings at an excellent pace.
The only downside to buying ASML now is its valuation. Since ASML's stock price has been rising much faster than earnings, its valuation has become significantly more expensive. ASML now sports a 39.3 forward price-to-earnings (P/E) ratio compared to a 10-year median P/E of 36. Meaning that even if ASML meets earnings expectations over the next year and the stock price goes nowhere, it will still trade at a premium to its historical average.
Therefore, investors buying ASML should only do so if they have at least a three- to five-year investment time horizon, as the stock could remain under a lot of near-term pressure as investors are already pricing in excellent results. But if ASML keeps delivering, it wouldn't be at all surprising if it blows past $2,000 per share in the coming years.
