Key Highlights
- UBS elevated ASML to its premier European semiconductor selection and increased its price objective to €1,900 from €1,600.
- Shares of ASML advanced 3.5% in Amsterdam trading following UBS’s upgraded outlook.
- The bank projects earnings per share reaching €48.42 by 2027 and €59.73 by 2028, approximately 15–20% higher than market consensus.
- CEO Christophe Fouquet announced that initial chips manufactured using High-NA EUV systems will emerge in the coming months.
- TSMC confirmed it will continue using ASML’s existing EUV technology for now, whereas Intel and SK Hynix are moving forward with High-NA adoption.
Shares of ASML surged 3.5% during Amsterdam trading sessions on Tuesday following UBS’s decision to designate the Netherlands-based semiconductor equipment manufacturer as its preferred European chip sector investment, while simultaneously elevating its valuation target to €1,900 from the previous €1,600.
The upward revision accompanied an optimistic research report from UBS analyst Francois-Xavier Bouvignies, who characterized ASML as presenting “the most attractive risk/reward in the sector.”
Despite holding the position as the globe’s premier chip equipment manufacturer, ASML has underperformed relative to industry competitors throughout the current year. The company’s shares have appreciated approximately 40% year-to-date, trailing the 48% to 70% advances recorded by competitors including Applied Materials, KLA, and Lam Research.
UBS views this performance disparity as a compelling investment opportunity. The financial institution observed that ASML currently trades at merely a 6% premium relative to large-cap U.S. counterparts based on 12-month forward price-to-earnings multiples. Historically, the company’s 10-year average premium stands at 84%.
Memory Market Position Represents Undervalued Growth Catalyst
A central element of UBS’s investment thesis revolves around ASML’s significant memory sector positioning. The bank characterized ASML as “the most memory-exposed semi-cap name,” projecting approximately 30–35% of revenues will originate from memory markets by 2026, surpassing the 25–30% range typical among U.S. competitors.
This market exposure has already generated superior performance. ASML achieved a 23% compound annual growth rate in memory-related revenues spanning 2020 through 2025, substantially exceeding the roughly 6% rate recorded by industry peers. UBS anticipates this outperformance will persist as DRAM technology node transitions drive escalating lithography equipment requirements through 2028.
UBS additionally dismissed concerns suggesting ASML might become a constraining factor for broader semiconductor industry expansion. The bank calculates that ASML’s 2027 production capacity can accommodate more than 50% year-over-year increases in advanced wafer manufacturing output, comfortably exceeding anticipated demand growth of approximately 25–30%.
Following comprehensive model revisions, UBS currently projects earnings per share of €48.42 in 2027 and €59.73 in 2028 — figures roughly 15–20% beyond prevailing market consensus.
Chief Executive Confirms High-NA Chip Production Imminent
Concurrently, ASML CEO Christophe Fouquet addressed inquiries regarding the company’s advanced High-NA EUV technology platform during an industry gathering in Antwerp on Monday.
Fouquet indicated that initial semiconductor products manufactured using High-NA equipment should materialize within months, referencing customers across 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 components up to 66% more compact than current-generation technology allows.
Intel has demonstrated the most aggressive preparation timeline for deploying these tools, while memory manufacturer SK Hynix has similarly verified intentions to implement the technology.
TSMC, representing ASML’s largest customer, indicated last month that High-NA equipment remains economically prohibitive currently. TSMC executive Kevin Zhang stated the foundry will maintain utilization of existing EUV technology across multiple upcoming chip generations, relying instead on architectural innovations rather than dimensional reductions to preserve competitive positioning.
UBS maintained that the High-NA adoption trajectory remains compelling notwithstanding TSMC’s cautious stance. The bank calculates High-NA technology can yield cost reductions of 20–40% for critical manufacturing layers compared to alternative patterning methodologies, projecting widespread industry adoption within two to three years.
Fouquet added that the artificial intelligence expansion is projected to sustain approximately 20% annual chip sales growth throughout upcoming years, while identifying foundries like TSMC and Samsung as the genuine constraint for AI scaling — given their necessity to expand manufacturing capacity and acquire additional ASML equipment to fulfill demand.
