Morgan Stanley has published a bullish case for ASML Holding NV, arguing the semiconductor equipment giant’s stock could rally 70% in an optimistic scenario. The investment bank’s call hinges on chipmakers increasing capital expenditure to meet soaring demand for artificial intelligence hardware, positioning ASML as a primary beneficiary.

ASML holds a near-monopoly on the extreme ultraviolet lithography machines essential for producing the most advanced semiconductors. This concentration gives it tremendous pricing power and visibility into industry investment cycles. The firm’s forecast reflects a belief that AI-driven demand for chips will sustain elevated spending levels for years, not months.

The broader market has been skeptical about the durability of the AI boom, creating a potential valuation gap if growth persists. Investors will watch ASML’s upcoming earnings and guidance for confirmation of this spending trajectory. Morgan Stanley’s view contrasts with more cautious peers who fear a cyclical downturn in chip demand.