Key Highlights
- UBS elevated ASML to its premier European semiconductor stock and increased the price target from €1,600 to €1,900.
- Shares of ASML gained 3.5% in Amsterdam trading following UBS’s bullish assessment.
- 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 technology will emerge in the coming months.
- While TSMC plans to continue using existing EUV systems, Intel and SK Hynix are moving forward with High-NA adoption.
Shares of ASML surged 3.5% during Amsterdam trading hours on Tuesday following UBS’s decision to crown the Netherlands-based chip equipment manufacturer as its preferred investment in Europe’s semiconductor space, while simultaneously raising its valuation target to €1,900 from the previous €1,600 level.
The upgrade arrived through a research report authored by UBS analyst Francois-Xavier Bouvignies, who characterized ASML as presenting the “most compelling risk/reward profile in the sector.”
Despite its position as the globe’s dominant chip equipment supplier, ASML has underperformed relative to competitors throughout the current year. The company’s shares have appreciated approximately 40% year-to-date, trailing the 48% to 70% advances recorded by industry rivals such as Applied Materials, KLA, and Lam Research.
UBS interprets this performance differential as a compelling entry point. The investment bank observed that ASML currently trades at merely a 6% premium to its U.S. large-cap counterparts based on 12-month forward price-to-earnings multiples. Historically, the company has commanded an 84% premium over the past decade.
Memory Market Positioning Emerges as Overlooked Catalyst
A central pillar of UBS’s investment thesis revolves around ASML’s significant positioning within the memory chip segment. The firm characterized ASML as “the most memory-exposed semi-cap name,” projecting that approximately 30–35% of revenues will stem from memory markets by 2026, surpassing the 25–30% exposure among American competitors.
This strategic positioning has already yielded superior performance. ASML achieved a 23% compound annual growth rate in memory-related revenues from 2020 through 2025, substantially outpacing the roughly 6% rate among peers. UBS anticipates this trajectory will persist as DRAM technology transitions drive heightened lithography equipment demand extending through 2028.
The bank also dismissed concerns regarding ASML potentially becoming a constraint on semiconductor industry expansion. UBS calculations indicate that ASML’s 2027 production capacity can accommodate over 50% year-over-year growth in advanced wafer manufacturing output, significantly exceeding the anticipated 25–30% demand growth.
Following comprehensive model revisions, UBS now anticipates earnings per share reaching €48.42 in 2027 and €59.73 in 2028 — figures that stand roughly 15–20% above prevailing market estimates.
Leadership Signals Imminent High-NA Chip Production
Meanwhile, ASML’s chief executive Christophe Fouquet provided updates regarding the company’s advanced High-NA EUV technology during an industry gathering in Antwerp on Monday.
Fouquet indicated that initial semiconductor products manufactured using High-NA equipment are anticipated within the next several months, with customers spanning both memory and logic chip 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 the production of chip components up to 66% smaller than what current technology permits.
Intel has emerged as the most proactive adopter in preparing for these tools, while memory manufacturer SK Hynix has similarly committed to deploying the technology.
TSMC, representing ASML’s largest customer, indicated last month that High-NA equipment remains prohibitively expensive at present. TSMC executive Kevin Zhang stated the foundry will maintain its reliance on current-generation EUV systems for multiple upcoming chip generations, leveraging architectural innovations rather than feature size reductions to maintain competitive advantages.
UBS maintains confidence in the High-NA adoption narrative despite TSMC’s cautious stance. The bank estimates High-NA technology can generate cost reductions of 20–40% on critical manufacturing layers compared to alternative patterning methodologies, projecting widespread industry adoption within two to three years.
Fouquet further emphasized that the artificial intelligence surge is projected to sustain approximately 20% annual growth in chip sales throughout upcoming years, identifying foundries like TSMC and Samsung as the actual constraints on AI industry expansion — as these manufacturers must develop additional production capacity and acquire more ASML equipment to meet demand.
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