AMD and ASML Positioned to Reach $1 Trillion Valuation
Advanced Micro Devices and ASML Holding are tracking toward trillion-dollar valuations as AI infrastructure spending accelerates.
The semiconductor sector is witnessing a surge in valuations driven by artificial intelligence infrastructure demands. Five companies in the industry now exceed the $1 trillion market cap threshold, including Broadcom and Micron Technology. SK Hynix recently crossed this mark before settling just below it. Analysts from GN stocks/chips identify Advanced Micro Devices and ASML Holding as the next likely candidates to join this exclusive group by 2028.
Capital expenditure from hyperscale cloud providers is shifting from physical data center construction to server upgrades for AI training and inference. This pivot creates sustained demand for high-performance computing components. The shift favors firms with integrated solutions for agentic AI, which requires tight coordination between GPUs and CPUs, as well as specialized manufacturing equipment for next-generation chips.
AMD expands data center footprint
Advanced Micro Devices is leveraging its combined CPU and GPU capabilities to address the agentic AI market. The company is launching Helios, a rack-scale solution that integrates GPUs, CPUs, and networking equipment into a single server unit. The first Helios units are scheduled for delivery this fall, with management reporting customer interest has exceeded expectations during the second-quarter earnings call in August.
AMD has secured deployment agreements with major AI developers including OpenAI, Anthropic, and Meta Platforms. These deals are designed to accelerate the company's AI data center revenue stream. In the most recent quarter, data center revenue grew 107% year over year. Management projects AI data center revenue will expand by more than 100% in the current quarter as well.
Earnings expectations reflect this growth trajectory, with EPS projected to rise from $2.65 last year to $15.61 next year. Although shares currently trade at 66 times earnings, this multiple could compress to the low 20s by 2028 due to rapid earnings growth. This combination of high growth and valuation normalization supports the potential for AMD to reach a $1 trillion market cap.
ASML scales lithography capacity
ASML Holding holds a monopoly on the most advanced lithography machines required for high-end semiconductor fabrication. The company’s equipment features a 30-year operational lifespan, fostering strong customer loyalty. Demand for ASML’s tools is rising as both advanced logic and memory chipmakers seek to increase production capacity to meet AI chip requirements.
To meet this demand, ASML plans to expand its manufacturing capacity by 30% next year, with a potential additional 30% increase in 2028. This represents a total capacity expansion of 69% from current levels. In 2024, management outlined a long-term revenue target of 60 billion euros by 2030. Based on management’s 2026 outlook, simple capacity-driven growth could result in 2028 revenue of approximately 74 billion euros.
The expansion is expected to generate significant operating leverage on research and development costs. ASML trades at a forward P/E ratio of 28, which is comparable to other silicon wafer fabrication equipment providers. The company’s dominant position in lithography and the anticipated earnings growth from capacity scaling underpin its valuation trajectory.
