Key Takeaways
- UBS elevated ASML to its preferred European semiconductor investment and boosted its target price from €1,600 to €1,900.
- Shares of ASML advanced 3.5% in Amsterdam trading after the analyst upgrade.
- The investment bank projects earnings per share of €48.42 for 2027 and €59.73 for 2028, approximately 15–20% higher than market consensus.
- CEO Christophe Fouquet announced that initial chips manufactured using High-NA EUV systems will debut in the coming months.
- While TSMC plans to continue with existing EUV technology, Intel and SK Hynix are moving forward with High-NA adoption.
Shares of ASML advanced 3.5% during Tuesday’s Amsterdam session after UBS designated the Netherlands-based semiconductor equipment manufacturer as its preferred investment within Europe’s chip sector and increased its valuation target to €1,900 from the previous €1,600.
The upgrade accompanied an optimistic research report from UBS analyst Francois-Xavier Bouvignies, who characterized ASML as presenting “the most attractive risk/reward in the sector.”
Notwithstanding its position as the global leader in chip manufacturing equipment, ASML has underperformed competitors throughout the current year. The stock has delivered approximately 40% returns year-to-date, trailing the 48% to 70% advances recorded by industry competitors such as Applied Materials, KLA, and Lam Research.
UBS views this performance differential as a compelling entry point. The investment bank highlighted that ASML currently commands merely a 6% valuation premium over major U.S. counterparts based on forward 12-month price-to-earnings ratios. Historically, the company’s 10-year average premium stands at 84%.
Memory Market Position Offers Undervalued Growth Potential
A central pillar of UBS’s investment thesis revolves around ASML’s significant memory segment presence. The firm characterized ASML as “the most memory-exposed semi-cap name,” projecting approximately 30–35% of revenue will originate from memory markets by 2026, exceeding the 25–30% range typical among American competitors.
This positioning has already generated superior performance. ASML achieved a 23% compound annual growth rate in memory-related revenue from 2020 through 2025, substantially outpacing the approximately 6% rate of industry peers. UBS anticipates this outperformance will persist as DRAM technology node transitions accelerate lithography equipment demand through 2028.
UBS additionally dismissed concerns that ASML might create supply constraints for the semiconductor industry. According to bank estimates, ASML’s 2027 production capacity can accommodate over 50% annual increases in advanced wafer manufacturing output, significantly exceeding anticipated demand growth of approximately 25–30%.
Following model adjustments, UBS now projects earnings per share of €48.42 in 2027 and €59.73 in 2028 — figures running roughly 15–20% ahead of prevailing market expectations.
First High-NA Manufactured Chips Expected Shortly
Separately, ASML CEO Christophe Fouquet discussed the company’s advanced High-NA EUV platform at an industry gathering in Antwerp on Monday.
Fouquet indicated that initial chips manufactured using High-NA systems should emerge within months, with customers spanning both memory and logic segments.
“Those technologies are expensive. They are requiring qualification. But they are always designed with the idea that over time they will lower the cost of patterning,” Fouquet said.
High-NA systems carry price tags reaching $400 million per unit. These machines enable production of chip geometries up to 66% more compact than existing capabilities.
Intel has demonstrated the most aggressive preparation for deploying these systems, while memory producer SK Hynix has similarly announced High-NA implementation plans.
TSMC, representing ASML’s primary customer, indicated last month that High-NA platforms remain cost-prohibitive currently. TSMC executive Kevin Zhang stated the foundry will maintain its current EUV technology across multiple upcoming process nodes, leveraging architectural innovations rather than feature size reduction to preserve competitive advantages.
UBS maintains that the High-NA business case remains compelling despite TSMC’s cautious stance. The bank calculates High-NA technology can generate cost reductions of 20–40% for critical manufacturing layers compared to alternative patterning methodologies, projecting widespread industry adoption within two to three years.
Fouquet further noted that artificial intelligence-driven demand should sustain approximately 20% annual growth in chip sales throughout upcoming years, identifying foundries like TSMC and Samsung as the primary constraint on AI infrastructure expansion — necessitating substantial facility investments and corresponding ASML equipment purchases to support industry scaling requirements.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
