ASML's Mistral AI Investment: Is It a Catalyst for Next Growth Phase?

ASML Holding’s ASML latest strategic investment of €1.3 billion in Mistral AI signifies that the company is taking steps to move beyond being a traditional semiconductor tool provider. Mistral AI is a French artificial intelligence (AI) company, recognized for its development of large language models.

The investment gives ASML Holding an 11% stake and a seat on Mistral AI’s strategic committee. The investment will also help ASML deeply integrate AI into its core lithography systems, which will enhance productivity, precision and customer chip yields.

AI already plays a growing role in chip design and manufacturing, and ASML Holding’s machines are central to that process. By embedding Mistral’s generative AI tools into its extreme ultraviolet (EUV) platform, ASML expects faster innovation cycles, improved time to market and reduced development costs. This can strengthen its competitive advantage, especially as chipmakers race to expand advanced logic and DRAM capacity for AI-driven workloads.

The partnership also connects ASML Holding more closely with the broader AI ecosystem, potentially opening opportunities beyond traditional equipment sales. Over time, software-enabled performance improvements could translate into recurring revenue streams and stronger margins.

While ASML Holding faces near-term challenges such as a slowdown in China and the ramp-up costs of new High-NA EUV tools, its collaboration with Mistral AI could define the company’s next growth phase. With the successful integration of Mistral AI tools into its lithography systems, ASML could drive the next wave of semiconductor innovation. The Zacks Consensus Estimate for 2025 revenues is pegged at $37.64 billion, indicating a 23.2% year-over-year increase.

ASML’s Rivals in Advanced Chipmaking Equipment Space

Although ASML is the only company providing EUV lithography tools, it operates in a broader ecosystem of semiconductor equipment makers. Its notable peers in the chipmaking equipment space are Applied Materials AMAT and KLA Corporation KLAC.

Applied Materials supplies equipment used in chip fabrication, including deposition and etching tools that are essential for both advanced and mature nodes. As chips become more complex with AI and high-performance workloads, Applied Materials’ tools aid in designing and making efficient and smaller node chips.

KLA Corporation specializes in process control, inspection and metrology systems. KLA Corporation’s equipment helps chipmakers monitor and improve yield during manufacturing.

ASML’s Share Price Performance, Valuation and Estimates

Shares of ASML Holding have risen 47.2% year to date compared with the Zacks Computer and Technology sector’s gain of 23.6%.

ASML YTD Price Return Performance

From a valuation standpoint, ASML trades at a forward price-to-earnings ratio of 33.99, significantly higher than the sector’s average of 28.37.

ASML Forward 12-Month P/E Ratio

The Zacks Consensus Estimate for ASML Holding’s 2025 and 2026 earnings implies a year-over-year increase of approximately 39.3% and 3.9%, respectively. Estimates for 2025 and 2026 earnings have been revised upward in the past seven days.

ASML Holding currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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