Chip stocks are booming! ASML surpasses Nestlé S.A. to become the third largest market cap in European stocks.

Overseas chip stocks continue to rally, with ASML being upgraded and its stock price reaching a two-year high, reclaiming the position of the third largest listed company in Europe from Nestlé S.A.

On Monday, ASML's European stock price rose nearly 3% to a two-year high, with a market valuation of EUR 284.6 billion, while the packaging food giant Nestlé S.A. has a valuation of approximately USD 273.2 billion, with only Novo Nordisk and LVMH having higher valuations than ASML in Europe.

ASML's stock price increase is supported by the expected recovery in spending on high-end equipment by chip manufacturers. The company previously predicted that there would be "significant" growth in 2025, despite limited revenue growth this year. Its main customer is TSMC.

Bernstein analysts Sara Russo and Chris Elias are optimistic about the prospects of this Dutch chip equipment company and have upgraded its stock rating:

We are upgrading our rating on ASML to "outperform" as the company's stock price becomes increasingly attractive compared to its peers. ASML's stock price increased by 35% last year, lagging behind the 60% increase in the Philadelphia Semiconductor Index. Although the next year seems challenging, considering the expected growth in 2025, now seems to be a good entry point for ASML.

Wall Street analysts have also recently expressed optimism about ASML, with Citigroup and Morgan Stanley listing the stock as their top pick among European semiconductor companies.

ASML will announce its fourth-quarter earnings report on Wednesday, and the stock's rally will face a test. Analysts expect the company's quarterly orders to decline by more than 40% compared to the same period last year, highlighting the demand challenges it faces in the near term.