European Chip Stocks Set to Benefit from AI Optical Boom, Says Morgan Stanley

In March 2026, analysts at Morgan Stanley highlighted a major shift in the AI market. The focus is moving beyond traditional chips to faster data transfer using optical technology. As AI models grow larger, data centers now need high-speed connections that use less power. This is where optical solutions are gaining attention. European semiconductor companies are quietly becoming key players in this space. Many are still undervalued compared to US rivals. 

But that gap may not last long. With strong demand expected through 2027, investors are starting to look at Europe differently. This shift could reshape the global chip industry and create new opportunities worth watching closely.

What Is Driving Growth in European Semiconductor Stocks?

European chip stocks are gaining attention as the AI market shifts beyond raw computing power to the infrastructure that supports AI workloads. Morgan Stanley highlights that AI data centers may soon be bottlenecked not by GPUs but by the optical systems that move massive amounts of data between servers. This shift opens growth opportunities for companies involved in photonics, silicon photonics, optical networking, and advanced packaging. 

European stocks such as Nokia, Soitec, STMicroelectronics, and BE Semiconductor Industries can benefit from this AI infrastructure buildout. The European optical addressable market is forecast to see rapid expansion through 2028, with a multi‑year growth cycle that markets have yet to fully price in.

ASML Holding N.V.: European Semiconductor Backbone

ASML Holding N.V. is one of Europe’s most important semiconductor stocks. It is the global leader in photolithography machines, especially extreme ultraviolet (EUV) systems that build the most advanced chips. ASML has near‑monopoly status and serves major chip makers worldwide.

Stock Details and Forecast

• ASML’s shares trade on Euronext Amsterdam and Nasdaq.
• Market cap consistently makes it Europe’s largest tech company.
• Meyka AI data shows the stock trading at around €1161.40 as of late January 2026, ahead of future earnings. Meyka AI rates ASML with a B+ grade, suggesting a BUY bias, though forecasts indicate modest movement over 5 years and stronger growth over 7 years.

Technical Summary

ASML’s trading metrics show price above key moving averages, signaling strength, though technical indicators like RSI suggest short‑term volatility around earnings periods.

What Meyka Says

According to Meyka, ASML retains high profitability and strong cash flow, but the valuation is rich (PE ~48.5), so short‑term swings around earnings releases should be expected.

Broader Analyst Views

Multiple analysts continue to view ASML as a key long‑term AI and semiconductor investment. A recent TD Cowen note calls the stock “very attractive” after a short pullback, with price targets up to €1500 as demand for EUV machines grows.

Barron’s also points out that ASML’s premium valuation has declined relative to peers, making it more compelling for investors focused on the long haul.

STMicroelectronics: Photonics and Silicon Platforms

STMicroelectronics N.V. supplies a range of semiconductor solutions. Morgan Stanley’s report highlights STMicro’s PIC100 silicon photonics platform and its role in photonic integrated circuits, growing rapidly between fiscal 2026 and 2028.

Stock Forecast and Outlook

• Meyka AI forecasts a neutral short‑term outlook, but projects long‑term gains over the next 3-7 years, with a potential rise toward ~€57 by 2031.
• Short‑term price action is mixed, but the bullish long‑term trend aligns with rising demand for AI‑related photonics and mixed analog/digital chips.

Institutional and Market Commentary

STMicro’s photonics and electronic IC revenues are expected to expand sharply due to near‑package optics and pluggable transceivers, a result of agreements with cloud hyperscalers and AI data centers.

Soitec: Materials Specialist in Silicon Photonics

Soitec produces advanced silicon substrates like silicon‑on‑insulator (SOI) used in high‑performance chips. SOI materials are critical for photonic and RF integrated circuits, positioning Soitec well in the AI optical growth theme.

👏 Congratulations to the CEA on the inauguration of #FAMES in Grenoble, a key milestone for the European semiconductor industry.

Soitec is proud to contribute with advanced #FDSOI at the core of this pilot line, accelerating innovation from lab to market 🚀#Semiconductors pic.twitter.com/IikFtygzSh

— Soitec (@Soitec_Official) February 2, 2026

Soitec’s near‑monopoly in silicon photonics materials is a key reason Morgan Stanley sees strong upside potential. Demand for these substrates is expected to scale with the adoption of photonic integrated circuits in optical networking and co‑packaged optics infrastructure.

Nokia and Optical Networking Growth

While not strictly a chip maker, Finland‑based Nokia is an important European player in optical and IP network solutions. Morgan Stanley’s overBbought call on Nokia hinges on rising optical demand from hyperscalers that expands cloud data infrastructure.

Jefferies also sees Nokia as a BUY with a solid price target, backed by strong order growth in optical and IP networking units. €1.5 billion in hyperscaler optical orders reported by late 2025 supports this view.

What Risks Should Investors Watch?

Even with structural growth trends, risks remain:

• Chip‑related stocks can be volatile around policy changes and global trade tensions.
• Demand cycles in semiconductors may fluctuate with macro conditions.
• Interest rates and inflation can influence capital expenditure in data centers.

Conclusion: Europe’s Role in the AI Supply Chain

European semiconductor and optical stocks are no longer sidelines in the AI infrastructure story. Leaders like ASML, STMicroelectronics, Soitec, and Nokia are positioned to benefit from rising demand for optical data movement and AI‑machine support systems. 

With insights from AI stock analysis tools like Meyka and fast‑evolving market forecasts, investors can evaluate opportunities for both long‑term growth and tactical positioning.

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Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.