UBS has restored ASML to the top position on its list of European semiconductor recommendations and raised its price target on the Dutch lithography giant to €1,900 from €1,600. Alongside the target lift, the bank has pushed its earnings-per-share forecasts for 2027 and 2028 significantly higher than prevailing market consensus.
The stock reacted positively to the note, trading up 3.5% in Amsterdam by 09:00 GMT on the day of the upgrade.
Market performance context
ASML’s shares have lagged a number of peers this year. Year-to-date the stock has risen roughly 40%, while several rivals have posted larger gains - in the range of 48% to 70% - including names cited by UBS such as AMAT, KLA and LAM. ASML has also trailed some of its own customers, with firms like Micron and SK Hynix showing still stronger appreciation.
UBS’s analysts view this relative underperformance as an investment opportunity. They note that, on a 12-month forward price-to-earnings basis, ASML now trades at only about a 6% premium to U.S. large-cap peers, which compares to a 10-year average premium of approximately 84%.
Analysts' rationale
The UBS team - led by Francois-Xavier Bouvignies - outlines three core arguments underpinning the upgrade and the higher target.
- Bottleneck concerns overstated - UBS argues that market worries about ASML becoming a constraint on semiconductor supply are exaggerated. Their analysis suggests ASML’s forecasted 2027 capacity could support more than 50% year-on-year growth in leading-edge wafer production, which they say comfortably outpaces projected demand growth of about 25% to 30%.
- Memory exposure as a driver - The bank highlights ASML’s relatively large exposure to the memory segment, estimating that roughly 30% to 35% of revenues will be memory-related by 2026, versus 25% to 30% for U.S. equipment peers. UBS points to a stronger historical memory revenue trajectory at ASML - a 23% compound annual growth rate from 2020 to 2025 compared with about 6% for peers - and expects lithography intensity tied to DRAM node shrink to sustain growth through 2028.
- High NA EUV adoption case intact - Despite some setbacks in the rollout timeline, notably slower adoption by TSMC, UBS maintains the economics of High NA EUV remain compelling. The bank estimates High NA can reduce costs on critical layers by 20% to 40% relative to alternative patterning methods and forecasts adoption within two to three years, citing potential throughput advantages of greater than 100% versus most alternatives.
Updated financial outlook
Following its revisions, UBS now projects ASML will report earnings per share of €48.42 in 2027 and €59.73 in 2028, figures the bank says are roughly 15% to 20% above consensus estimates. UBS concludes that ASML represents an attractive risk/reward profile in the European semiconductor equipment sector and has reinstated it as the bank’s top sector pick.
Implications
UBS’s note underscores confidence in ASML’s capacity trajectory, the durability of its memory-related revenue streams and the long-term case for next-generation High NA lithography, while acknowledging some timing uncertainty around adoption by major foundry customers.