ASML's 59% Rally: What's Driving the Semiconductor Equipment Giant Higher?

The Numbers Tell the Story

ASML has been on quite a run lately. After a modest 15% gain in the first half of 2025, the Dutch semiconductor equipment maker surged 59% for the year, outpacing the S&P 500 and heavyweight peers like Nvidia and Taiwan Semiconductor Manufacturing. The stock now sits at all-time highs above $1,100 per share, pushing the company’s market capitalization to $428 billion—securing a spot among the world’s 25 most valuable publicly traded companies.

What’s driving this momentum? The latest financial results provide some clues. In the third quarter, ASML reported revenue of €7.51 billion ($8.73 billion) with an impressive 51.6% gross margin. Net income came to €2.12 billion, translating to €5.49 per share. The company also guided for fourth-quarter sales between €9.2 billion and €9.8 billion with margins of 51-53%, while projecting full-year 2025 sales roughly 15% higher than 2024.

Those profit margins are the real story here—a 51.6% gross margin in capital equipment is exceptional and speaks to the company’s pricing power.

The Competitive Moat: EUV Technology Dominance

ASML’s competitive advantage rests on a single, insurmountable fact: it’s the only company manufacturing extreme ultraviolet (EUV) lithography systems.

Here’s why that matters. Modern semiconductor production relies on lithography machines to etch microscopic circuits onto chips. Most competitors use deep ultraviolet (DUV) technology, which employs dozens of lenses to focus light onto silicon. ASML’s EUV systems, by contrast, use mirrors instead of lenses and operate at shorter wavelengths, enabling manufacturers to print far smaller features on chips.

This wavelength advantage translates directly into denser, more powerful chips. The smaller the components, the more transistors fit on a single piece of silicon.

ASML sells both EUV and DUV systems. The DUV machines serve high-volume production of advanced logic and memory chips that don’t require EUV’s cutting-edge resolution. In Q3, the company shipped 66 new lithography systems and six used units. While net bookings of €5.4 billion were slightly down year-over-year, the consistent demand underscores how critical these machines are to the semiconductor supply chain.

Wall Street’s Verdict: Overwhelmingly Bullish

Analyst coverage tells its own tale. Among 42 analysts tracking ASML on MarketWatch, only one rates the stock a sell. That’s telling.

JPMorgan recently raised its price target from $1,175 to $1,275, suggesting 15% upside potential. The bank also identified the semiconductor capital equipment segment as the most attractive area in the sector, with ASML as the top pick within that group.

Morgan Stanley analyst Lee Simpson similarly raised his target from $1,132 to $1,161 on November 26.

The consensus is clear: the semiconductor equipment space is firing on all cylinders, and ASML sits at the top of that food chain.

Looking Ahead to 2026

With shares trading well above $1,100, a forward stock split has become an intriguing possibility. ASML hasn’t conducted one since 2000, when it completed a 3-for-1 split. Should management announce a split in 2026, the stock could attract retail investors and potentially reach new highs.

The combination of strong margins, technological superiority, bullish analyst sentiment, and forward growth guidance makes ASML a compelling story heading into next year. Whether the rally sustains or pulls back, one thing remains unchanged: ASML’s stranglehold on EUV technology gives it a durable competitive advantage that most companies can only dream about.