Morgan Stanley upgrades ASML, says AI tailwinds will boost the stock

ASML will rise amid the ongoing artificial intelligence boom, with several tailwinds propelling the semiconductor equipment stock's growth, according to Morgan Stanley. The investment firm upgraded ASML to overweight from equal weight. "We expect the earnings debate to shift from 2025-26 to 2026-27 forecasts, and we see several possible growth drivers for this timeframe," analyst Lee Simpson said in a note. ASML YTD mountain ASML year to date Simpson pointed to the recent expansion of AI chip foundries as well as an increase in semiconductor chip manufacturing in China as potential growth drivers. Improving spending in memory chips over the second half of 2026 and 2027 will also be a major tailwind for the stock, he added. "Samsung's large Tesla foundry order, NVDIA's $5bn investment in Intel and optimistic projections by a government funded foundry in Japan (Rapidus) are now raising hopes again for a wider, more competitive set of leading Logic spenders," Simpson said. The market has not priced in ASML's cost control measures and shift in its gross profits, Simpson added. "We can see some ... headwinds reversing and potential for positive momentum to re-emerge," Simpson said. Morgan Stanley's call aligns it with the majority of sell-side shops. Ten analysts, or two-thirds of those covering ASML, have assigned a buy or strong buy rating to the stock, according LSEG data. ASML shares are up more than 3% in premarket trading on Monday. The stock has risen roughly 33% over the year to date.