Morgan Stanley reaffirmed its "overweight" recommendation on ASML Holding NV on Tuesday and left its price target unchanged at €1,400, but the firm warned that the Dutch semiconductor equipment maker may see limited upside in the near term as 2026 demand for its extreme ultraviolet - EUV - systems skews toward the latter half of the year.
The brokerage expects ASML to report first-quarter results in line with consensus on April 15, projecting top-line sales of €8.64 billion. That figure sits at the high end of ASML's own guidance range of €8.2 billion to €8.9 billion for the quarter.
Morgan Stanley modeled a gross margin of 52.8% for the period, a projection 61 basis points above consensus estimates. The bank noted that ASML shares closed at €1,175.40 on March 23, which implies approximately 19% upside from that closing price to reach Morgan Stanley's €1,400 target.
Looking further ahead, Morgan Stanley's 2027 outlook for ASML is more bullish than Street consensus. The brokerage forecasts revenue of €47.90 billion for 2027 versus a consensus figure of €44.49 billion, and earnings per share of €46.41 compared with a consensus EPS of €38.63.
The firm said EUV demand in 2026 is weighted toward the second half of the year, driven by DRAM cleanroom expansions and orders from Taiwan Semiconductor Manufacturing Co. - TSMC. In response to expected memory capital expenditure, Morgan Stanley raised its full-year 2026 estimate for EUV systems bound for DRAM customers to 22 units from 19. It also lifted its total EUV shipment forecast for 2027 to 84 systems from 80, citing higher capital spending from Micron Technology Inc.
"This solid DRAM demand underpins our new forecast of 84 EUV system shipments in 2027," Morgan Stanley said.
The brokerage highlighted that supply constraints for immersion deep ultraviolet - DUV - systems, rooted at optics supplier Carl Zeiss AG, had pushed expected 2026 shipments below 2025 levels and pressured margins. Morgan Stanley described the shortfall as the result of a ramp mismatch after a sharp acceleration in customer demand during October-November 2025, largely related to AI, and said those constraints are easing.
On geographic exposure, Morgan Stanley trimmed its projected share of 2026 revenue from China to 21% of total sales from a prior 27%, implying an 18% year-on-year decline in that region and aligning with ASML management guidance. The bank then modestly raised its estimate for China revenue share in 2027 to 18% from 21%, citing an anticipated recovery in memory-related spending.
The combination of shipment and regional assumptions led Morgan Stanley to adjust its EPS forecasts, lifting its 2026 estimate by 41 basis points to €30.09 and nudging its 2027 estimate up by 8 basis points to €46.41. Valuing ASML at 31 times its 2027 EPS estimate, the brokerage arrived at the €1,400 price target. Its scenario range spans a bull case at €2,000 and a bear case at €400.
Among analysts tracked by Refinitiv, Morgan Stanley noted that 78% carry an "overweight" view on ASML, 17% are at "equal-weight" and 6% at "underweight."
Summary
Morgan Stanley kept an "overweight" rating on ASML with a €1,400 target while warning of limited upside near term as EUV demand shifts into the second half of 2026. The brokerage raised its 2026 DRAM-focused EUV shipment forecast and its 2027 total EUV shipment view, adjusted China revenue share assumptions, and slightly raised EPS estimates for 2026 and 2027.
Key points
- Morgan Stanley maintains an "overweight" rating and a €1,400 price target on ASML, with shares at €1,175.40 on March 23 implying about 19% upside to the target.
- The bank raised its 2026 EUV DRAM shipment estimate to 22 units from 19 and its 2027 total EUV shipment forecast to 84 systems from 80, citing stronger DRAM capex from Micron and orders from TSMC.
- Revenue exposure to China is revised down for 2026 to 21% of sales from 27%, then up to 18% for 2027 from 21%, reflecting a projected near-term decline followed by memory spending recovery.
Risks and uncertainties
- Timing risk: EUV demand skewed to the second half of 2026 could constrain near-term revenue and share price appreciation in the semiconductor equipment sector.
- Supply-side risk: Prior immersion DUV supply constraints at optics supplier Carl Zeiss AG had pushed 2026 shipments below 2025 levels and pressured margins; although the brokerage sees easing, supply disruptions remain a noted uncertainty for semiconductor equipment manufacturers.
- Regional demand risk: A significant year-on-year decline in China revenue is assumed for 2026, creating exposure to regional demand swings in the global semiconductor market.