Key Points

ASML remains the sole supplier of advanced lithography systems required to produce chips for AI data centers, smartphones, and PCs.
The firm lifted its outlook last quarter, and a similar move could occur with the upcoming Q2 update.
Analysts continue to increase earnings growth forecasts for ASML, suggesting the stock may keep its strong momentum.

ASML Holding (NASDAQ: ASML) serves as a critical player in the worldwide semiconductor supply chain. The Netherlands-based company manufactures sophisticated fabrication tools that leading foundries, memory producers, and integrated device makers use to create processors for multiple applications.

These high-end chips rely on ASML's extreme ultraviolet lithography equipment, which patterns billions of transistors onto silicon wafers. No other firm offers these EUV systems, making ASML essential for advanced semiconductors powering AI data centers, smartphones, PCs, and additional uses.

Not surprisingly, ASML shares have climbed roughly 50 percent year to date in 2026. The company plans to report second-quarter results on July 15, and investors may see results and guidance that exceed forecasts.

Let's examine the reasons behind this potential outcome.

Image source: ASML.

Strong demand for advanced process nodes supports ASML growth

Advanced nodes involve etching ever-smaller transistors onto wafers. Smaller transistors allow more to fit on each wafer, speeding electron movement and boosting computing performance. Tighter packing also reduces heat output and improves energy efficiency.

Nodes below 7 nanometers qualify as advanced, with 2nm and 3nm processes now common for AI chips in data centers. Memory firms including SK Hynix and Micron Technology also deploy EUV tools to create faster, lower-power memory products.

Because ASML alone produces EUV machines, its revenue has expanded steadily in recent years.

Data by YCharts

Fortune Business Insights projects nearly 16 percent annual growth in demand for advanced nodes through 2034. This outlook supports long-term expansion for ASML and explains why analysts have grown more optimistic about future earnings.

Data by YCharts

Potential earnings beat and guidance raise could lift shares

After posting Q4 2025 results in January, ASML projected full-year revenue between 34 billion and 39 billion euros. In April it raised the range to 36 billion to 40 billion euros, pointing to semiconductor demand exceeding supply.

Heavy AI data center spending by hyperscalers and AI developers is prompting foundries and memory makers to increase capital outlays. Consequently, ASML's revenue and profit may surpass Wall Street targets next week, and continued equipment demand could prompt another guidance increase that supports the stock.

Although shares trade at 48 times forward earnings, analysts have already lifted growth estimates substantially over the past year. Further upgrades tied to secular chip demand could drive additional gains for this AI-related name over time.

Should investors purchase ASML shares at present?

Before committing capital to ASML, note the following:

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Harsh Chauhan holds no positions in the securities discussed. The Motley Fool maintains positions in and recommends ASML and Micron Technology. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.