AMD and ASML are the next semiconductor companies likely to reach $1 trillion market valuations by 2028, driven by explosive demand for AI chips and manufacturing equipment. Both companies are expanding capacity and launching new products to capture market share in a sector where hyperscalers are spending record amounts on infrastructure.

Why Are Semiconductor Companies Suddenly Worth Trillions?

The artificial intelligence boom has fundamentally reshaped how much money flows through the semiconductor industry. Five semiconductor companies now have market caps exceeding $1 trillion, including Broadcom and Micron Technology, with SK Hynix hovering just below the threshold. The reason is straightforward: every AI model, data center, and device requires physical chips to function, and demand has far outpaced supply.

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, has told major customers including Nvidia and Broadcom that it cannot meet all their demand for advanced AI processors, even after expanding capacity fivefold in 2026. An estimated 85% or more of TSMC's capacity for 2026 and 2027 is already booked. Elsewhere in the supply chain, Micron's high-bandwidth memory chips, which are essential for AI processors, are contractually sold out for the rest of the year.

How Is AMD Positioning Itself for Trillion-Dollar Status?

Advanced Micro Devices (AMD) is well-positioned to capitalize on the growing use of agentic AI, which requires coordination of graphics processing units (GPUs) and central processing units (CPUs). AMD offers leading capabilities in both markets and is combining its expertise into a rack-scale solution called Helios. A rack-scale system bundles GPUs, CPUs, networking equipment, and other components into a single server rack, allowing AMD to capture a larger share of data center real estate rather than selling individual chips.

AMD's Helios units are set to begin shipping this fall, with customer interest tracking ahead of expectations. The company has already struck deals with OpenAI, Anthropic, and Meta Platforms to deploy Helios systems. This strategy is paying off: AMD's data center revenue grew 107% year over year in its most recent quarter, with AI data center revenue expected to grow "well over" 100% in the current quarter.

The strong revenue growth is translating into exceptional earnings-per-share expansion. Current market expectations call for AMD's earnings per share to climb from $2.65 last year to $15.61 next year, a roughly sixfold increase. Even though AMD shares currently trade at 66 times earnings expectations, analysts believe the stock could reach a $1 trillion valuation by 2028 if the earnings multiple compresses to the low 20s while growth continues.

What Makes ASML the Semiconductor Industry's Chokepoint?

ASML Holding is a Dutch company that manufactures extreme ultraviolet (EUV) lithography machines, which are the only equipment in the world capable of printing the most advanced chip designs onto silicon. This makes ASML essentially a monopoly supplier to the entire semiconductor industry. Even ASML's older technology is preferred by manufacturers, and with a 30-year lifespan for its machines, the company benefits from exceptional customer loyalty.

The massive boom in demand for AI chips has created unprecedented order backlogs for ASML. The company's order backlog hit a record 38.8 billion euros, roughly 1.2 times its total 2025 revenue, with EUV capacity fully booked through 2027. To meet this demand, ASML is planning a significant expansion of its manufacturing capacity, with plans to increase production by 30% next year and potentially another 30% in 2028, for a total 69% expansion from current capabilities.

In 2024, ASML management provided a long-term outlook calling for 60 billion euros in revenue by 2030. With the expanded capacity, the company should significantly exceed that target. If ASML merely grows sales at the same rate as its capacity expansion over the next two years, it will generate approximately 74 billion euros in revenue for 2028 based on management's 2026 outlook. The company should exhibit strong operating leverage as it expands production, meaning earnings could grow faster than revenue.

How to Evaluate Semiconductor Stocks in the AI Era

• Capacity Constraints: Look for companies with order backlogs extending years into the future, as this provides unusual visibility into revenue and signals that demand far exceeds current supply capacity.
• Earnings Growth Trajectory: Semiconductor companies in the AI boom are seeing earnings-per-share growth of 100% or more annually; compare current valuations to expected earnings multiples in 2028 rather than today's inflated ratios.
• Competitive Moat: Favor companies with defensible market positions, such as ASML's monopoly on advanced lithography or AMD's integrated GPU-CPU solutions, rather than commodity chip makers facing intense competition.
• Customer Concentration Risk: Be aware that some semiconductor companies depend on a handful of hyperscalers for the majority of revenue, which could shift if those customers develop their own chips or reduce spending.
• Valuation Compression Potential: Even if earnings multiples decline significantly from current levels, companies with exceptional growth rates can still reach trillion-dollar valuations if they execute on capacity expansion plans.

ASML currently trades at a forward price-to-earnings ratio of 28, around the same valuation as other semiconductor equipment providers. However, its dominance of the lithography market should afford it a premium valuation. If earnings grow in line with expected revenue growth, ASML can reach a $1 trillion valuation by 2028 even with a 10% compression in its earnings multiple.

The semiconductor industry is experiencing a once-in-a-generation shift driven by AI infrastructure spending. Hyperscale cloud providers are likely to spend even more on chips in the future as capital expenditure budgets shift from building physical structures to adding and replacing servers for AI training and inference. This structural change suggests that the trillion-dollar club will continue to expand, with AMD and ASML positioned as the next entrants if they execute on their growth plans.