Any concerns about a slowdown in artificial intelligence (AI) infrastructure spending were put to rest by one of the most important semiconductor companies in the world -- ASML Holding (ASML +3.80%) -- when it released its second-quarter results on July 15.
ASML's revenue and earnings blew past Wall Street's expectations. It also raised its full-year guidance. This terrific performance shouldn't come as a surprise considering the Dutch company's critical role in the global semiconductor market. ASML stock, which has already jumped nearly 50% in 2026, is now poised for stronger gains.
Let's take a look at a simple reason why investors should consider buying this semiconductor stock following its solid Q2 report.
Image source: ASML.
Aggressive spending on chipmaking infrastructure will boost ASML's growth
ASML reported Q2 revenue of 9.3 billion euros and net income of 2.92 billion euros. Analysts would have settled for net income of 2.62 billion euros on revenue of 8.8 billion euros. However, the booming demand for advanced chipmaking equipment to serve the growing appetite for AI chips deployed in data centers, smartphones, and personal computers (PCs) helped ASML easily crush expectations.
NASDAQ: ASML
Key Data Points
The company's revenue jumped 21% year over year, while net income increased almost 28%. Even better, ASML expects its annual revenue to land between 43 billion euros and 45 billion euros, nearly 21% higher than the guidance of 34 billion euros to 39 billion euros it issued at the beginning of the year. It has also increased its gross margin guidance by three percentage points, to 55% at the midpoint.
The updated guidance points to a 35% increase in ASML's revenue this year at the midpoint. Its earnings growth will be stronger, considering that ASML reported a gross margin of 52.8% in 2025. However, don't be surprised to see ASML further increase its guidance. That's because the company is on track to increase the supply of its advanced chipmaking equipment by an additional 30% for the next three years.
The company notes that the demand for advanced logic chips based on 5-nanometer (nm), 4nm, 3nm, and 2nm will drive stronger sales. Meanwhile, the severe shortage of memory chips is prompting stronger investments by memory manufacturers, which explains why ASML anticipates a 75% increase in memory-related revenue this year.
Importantly, memory manufacturers are poised to spend big on chipmaking equipment over the long run. Industry giants SK Hynix and Samsung are poised to spend more than $2 trillion on shoring up their manufacturing capabilities over the next decade, indicating that ASML's addressable market will improve.
So, ASML could end up clocking stronger-than-expected growth over the long run, paving the way for potentially more upside.
This chip giant isn't done soaring yet
ASML's 12-month median price target of $2,393 points to a potential 38% jump from current levels. However, the chart below indicates that analysts now expect stronger earnings growth.
Data by YCharts
Assuming ASML indeed achieves earnings per share of $75.06 in 2028 and trades at 40 times earnings at that time, in line with its forward earnings multiple, the stock could soar to $3,002. That's a potential 70% jump, giving investors a solid reason to buy this AI stock following its impressive report.
