Chipmaker ASML's Stock Forms Tight Pattern, Indicating High Demand

Shares of chip equipment maker ASML Holdings (ASML) are flashing bullish signs worthy of consideration as stock market volatility persists. Trading below an add-on entry, ASML stock is the Big Cap 20 name to watch this week.

Semiconductors are among a few key areas in the equity market flexing relative strength recently, with many stocks outperforming and trading tightly. Several chipmakers are extended, but ASML could still be a viable candidate for adding exposure. Shares of the Dutch multinational manufacturer are holding support above their short- and long-term moving averages following a striking 160% climb from 2025 lows.

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ASML Stock: Why A Three-Weeks-Tight Is A Bullish Sign

The company, based in the Netherlands, is broken up into three key segments: Advanced Semiconductor Engineering, or ASE; Siliconware Precision Industries, or SPIL; and Universal Scientific Industrial, or USI. They provide chip manufacturing services, including packaging and testing.

ASML stock is quickly approaching a 1,493.48 three-weeks-tight buy point, according to IBD MarketSurge chart analysis. The most recent breakout from a traditional base occurred in late October. Then, after touching off support at the 10-week line, shares vaulted higher once again. In the three most recent weeks, shares traded tightly to form the current three-weeks-tight pattern.

A three-weeks tight on a stock’s chart is a bullish sign. After rallying from a buy point and refusing to give up ground, it’s possible to see a stock then close at nearly the same price for multiple weeks in a row. This behavior suggests that overall demand for the stock is exceptionally high. The time to add shares is usually when the stock climbs at least a dime above the highest intraday price in the tight pattern, ideally in strong weekly volume.

Also bullish, ASML stock’s relative strength line rose near new highs this week. That’s significant confirmation of strength, especially during a volatile market. The chipmaker also has a rugged Relative Strength Rating of 95, indicating it’s outperforming 95% of stocks in IBD’s database.

According to IBD Stock Checkup, ASML stock sports a high 98 IBD Composite Rating. That’s due to a combination of fundamental and technical strength. The stock has a solid 91 out of a best-possible 99 Earnings Per Share Rating.

Earnings Boosted By AI-Fueled Surge In Bookings

On Jan. 28, ASML released fiscal fourth-quarter results that topped Wall Street’s estimates, driven by AI-related demand. Earnings climbed 22% year over year to $8.62 per share on a 19% revenue surge to $11.4 billion, according to MarketSurge data.

The company is the only maker of extreme ultraviolet, or EUV, lithography machines. Equipment with this technology is used to make advanced chips for smartphones, cars, and medical equipment. ASML also makes the software for its lithography machines.

For fiscal year 2026, analysts expect ASML’s earnings to climb 21% to $35.15 per share. That should be followed by a 29% increase in fiscal 2027, according to Investor’s Business Daily’s MarketSurge.

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