Here's a funny thing about the semiconductor business: everyone's always looking 18 months ahead. So while ASML Holding NV (ASML) shares were having a rough day, down about 4.9% to $1,444.38, the real conversation among investors wasn't about today's price. It was about 2027.
That's according to Ben Barringer, the Global Head of Technology Research at Quilter Cheviot. He explained that because the chip sector plans so far in advance, 2027 is becoming the primary focus for investors right now. The market already expects 2026 to be a year of solid growth; the question is whether 2027 brings an acceleration.
And for a signal on that, you look at the big spenders. Barringer pointed directly to Taiwan Semiconductor Manufacturing Company Ltd (TSM), which is expecting a whopping 32% increase in capital expenditures for 2026 and has hinted that 2027 looks just as strong. That's not just a number on a spreadsheet—it's a massive wave of investment heading straight for the companies that make the tools to build chips, like ASML.
"Parsing CapEx remains complex," Barringer noted, especially for a giant like Samsung Electronics Co, Ltd (SSNLF), which spends across both memory and logic chips. More clarity will also come from other memory players like SK Hynix. But the overall outlook, he said, is robust. This spending is being fueled by the insatiable demand from hyperscale customers—think Amazon.com Inc (AMZN), Microsoft Corp (MSFT), Alphabet Inc.'s Google (GOOGL), and Meta Platforms Inc (META)—who need more and more chips for their AI and cloud infrastructure.
The AI Engine and the Inevitable Cycle
So, is AI changing the game completely? Barringer broke it down. Semiconductor cycles usually come in two flavors: ones driven by broader economic (macro) demand and ones driven by inventory imbalances. Memory chips are famously cyclical, often following a two-year up, two-year down pattern as new supply slowly comes online to meet demand.
AI has become a huge new driver, especially for memory. The key point Barringer made is that this AI-related demand is "relatively price inelastic." In plain English, that means the big tech companies need these chips so badly that they'll keep buying them even if prices go up. It's a strong, stable source of demand.
But here's the catch: supply will eventually catch up. "Despite increasing consolidation and signs of more rational market behavior," he said, "supply-and-demand dynamics will continue to drive cycles." So even with AI's powerful tailwind, the old rules of the chip business haven't been repealed.
The Regulatory Cloud on the Horizon
It's not all smooth sailing. Barringer flagged a specific regulatory risk that could ding ASML's revenue. It revolves around the potential for U.S. restrictions under something called the MATCH Act. If enacted, these could limit ASML's ability to ship certain types of advanced manufacturing tools—specifically immersion tools used at the 28-nanometer node—to Chinese chipmakers.
He crunched the numbers: these immersion tools account for about 10% to 15% of ASML's revenue. China makes up roughly half of that business segment. Do the math, and you get a potential impact of 7% to 10% on ASML's overall revenue. Barringer noted these measures are still in early stages and are part of a broader trend of chip-related restrictions that started back in 2018. It's a risk to watch, but not an immediate crisis.
The bottom line, according to Barringer, is that ASML continues to navigate these challenges from a position of strength. Why? Because the fundamental story hasn't changed: global demand for chips is soaring, and someone has to make the incredibly complex machines that make those chips. For the most advanced ones, that someone is still ASML. So while the stock might be down on a given Wednesday, the long-term wave—powered by TSMC's spending spree and inelastic AI demand—is still building, with 2027 looking like the point where it really starts to crest.
