Should You Buy ASML Stock Before Jan. 28?

The past year was rewarding for ASML (NASDAQ: ASML) investors as shares of the semiconductor equipment supplier shot up 73%. Investors have been buying the Dutch giant's stock hand over fist of late as its order book swelled to meet the fast-growing demand for its advanced chipmaking equipment that's used for making artificial intelligence (AI) chips.

Investors may now be wondering if it is a good idea to buy ASML stock in the new year following its recent surge. A closer look at recent market developments suggests that ASML could sustain its momentum in 2026, with the company's upcoming results for the fourth quarter of 2025 on Jan. 28 acting as a catalyst for the stock.

Let's look at the reasons why that's likely to be the case.

Image source: ASML

Higher AI chip spending will be a tailwind for ASML

The new year started on a terrific note for ASML investors when the stock received a massive upgrade from investment advisory firm Aletheia Capital. The firm raised its rating on ASML from sell to buy. Even better, it doubled its price target from $750 to $1,500.

This huge upgrade by a firm that had been skeptical about ASML's prospects earlier sent the stock up by almost 9% on the first trading day of 2026. Aletheia Capital points out that the surge in capital spending by foundries like Taiwan Semiconductor Manufacturing (NYSE: TSM) will be a catalyst for ASML. It is easy to see why the investment firm makes this claim.

ASML is the leading manufacturer of lithography machines that are used for printing advanced chips. It reportedly controls more than 90% of the deep ultraviolet (DUV) lithography market, while it has a near-monopoly in extreme ultraviolet (EUV) lithography. These machines are necessary for producing advanced chips that are utilized in various AI-related applications, spanning data centers, computers, and smartphones.

The demand for these advanced chips, which are manufactured using small process nodes such as 5-nanometer (nm), 3nm, and now 2nm, is so strong that they are already sold out. For instance, TSMC's 2nm node, which has just gone into mass production, is said to be fully booked for 2026. The same is reportedly the case with the 3nm and 5nm chips that TSMC manufactures for various clients such as Nvidia, AMD, Apple, Qualcomm, and others for multiple devices and applications.

This is probably the reason why TSMC is anticipated to boost its capex in 2026 to close to $50 billion, up from its 2025 spending of $40 billion to $42 billion. It is worth noting that TSMC allocated 70% of its 2025 capex toward advanced chip processing technologies last year. ASML appears to have benefited from this, as orders for the company's equipment strengthened as 2025 progressed.

It received just under 4 billion euros worth of orders in Q1, 5.55 billion euros in Q2, and 5.4 billion euros in Q3. There is a good chance of ASML's order inflow remaining strong in 2026 as spending on wafer and fabrication equipment (WFE) is forecasted to increase by 9% this year to $145 billion. A big chunk of that money is likely to be spent on advanced chipmaking equipment, considering the scarcity of advanced chips needed for AI applications.

As such, there is a good chance ASML will outperform Wall Street's expectations this year.

The stock is still worth buying

According to consensus estimates, ASML's earnings increased by 28% in 2025 on a 15% increase in revenue. However, the cautious approach that ASML adopted with respect to its outlook in 2025, owing to tariffs, explains why analysts expect slower growth this year.

ASML's 2026 revenue and earnings are forecast to jump by 6%. But the semiconductor giant could easily do better than that, thanks to the favorable conditions in the semiconductor industry where demand is outpacing supply. Moreover, ASML trades at 34 times forward earnings, which isn't very expensive when we consider that the tech-laden Nasdaq-100 index has an earnings multiple of 32 (using the index as a proxy for tech stocks).

If ASML can indeed outperform Wall Street's expectations this year, which it seems capable of doing, it should be able to sustain its impressive rally in the new year. That's why this AI stock seems worth buying even after the impressive gains that it has clocked in the past year.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.