We recently compiled a list of the Morgan Stanley’s 15 Best European AI Stocks. In this article, we are going to take a look at where ASML Holding N.V. (NASDAQ:ASML) stands against Morgan Stanley’s other European AI stocks.
In August last year, investment bank Morgan Stanley released an investor note highlighting that even though the chaos around prominent AI firms had somewhat subsided, an AI rumbling in Europe was just about to begin. Analysts at the investment firm compared the AI buzz to historical similarities in the mid-1990s, just before the internet craze. According to Morgan Stanley analysts, European semi stocks were experiencing a tactical correction and would hit new highs in the coming months. The note further detailed that a basket of these equities, handpicked by these experts, and nicknamed AI winners, had returned close to 45% on average since January 2023, the beginning of the AI revolution. These firms had outperformed the 14% jump recorded by the MSCI Europe benchmark, per the research.
Read more about these developments by accessing 10 Best AI Data Center Stocks and 10 Buzzing AI Stocks According to Goldman Sachs.
In the months since, European AI stocks have experienced significant volatility, most recently influenced by global developments and investor sentiment. A notable event was the introduction of a low-cost AI model by Chinese startup DeepSeek, which raised concerns about the profitability of existing AI companies that rely on expensive chips and infrastructure. This led to a sharp decline in European tech stocks, with the European tech index dropping 5.8%, marking the worst decline since October 2024. However, the market showed resilience shortly after. European shares reached a record high, driven by gains in retail and utilities stocks as tensions in the tech sector subsided. European stock pickers are exploring established sectors such as utilities, professional data providers, and even copper miners to tap into the next wave of AI advancements. This approach reflects a strategic shift towards industries that can support and benefit from AI infrastructure and applications.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected companies based in Europe that have been benefiting from the AI boom. An important investor note by investment bank Morgan Stanley on European AI stocks formed the basis for this list. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician in a clean room working on a semiconductor device, illuminated by the machines.
ASML Holding N.V. (NASDAQ:ASML)
Number of Hedge Fund Holders: 64
ASML Holding N.V. (NASDAQ:ASML) is a Netherlands-based firm that makes and sells advanced semiconductor equipment systems. Back in August, Morgan Stanley named the firm among a basket of equities that comprise the European AI shopping list. Morgan Stanley had a $1,092 price target on the stock, implying upside potential of an impressive 27%. Analyst Lee Simpson highlighted that ASML had a monopoly in leading-edge lithography equipment. However, despite this monopoly, or maybe because of it, the company has come under increased governmental scrutiny. In the past six months, the US and Dutch governments have placed additional curbs on the sale of lithography equipment to China. ASML stock has declined by more than 17% since early August and is presently trading at around $712.
Overall ASML ranks 1st on our list of Morgan Stanley’s European AI stocks. While we acknowledge the potential of ASML as an investment, our conviction lies in the belief that some stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a stock that is more promising than ASML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.