TLDR
- ASML stock rises 1.9% to $1,108.78 following upgrades from Bank of America and JPMorgan
- Bank of America sets €1,158 price target while JPMorgan raises target to $1,275
- Tool shipments expected to reach 55 units in 2026 and 63 in 2027, exceeding forecasts
- Gross margins projected to expand 150 basis points, driving 30% earnings growth
- Fourth-quarter orders anticipated at €7.4 billion, well above €6 billion consensus
ASML caught fire on Wall Street. Shares of the Dutch semiconductor equipment manufacturer climbed 1.9% to $1,108.78 after receiving simultaneous upgrades from two banking giants.
Bank of America added ASML to its prestigious “25 stocks for 2026” list. The firm raised its price target to €1,158 from €986 while keeping its Buy rating intact. JPMorgan wasn’t far behind, boosting its target to $1,275 from $1,175.
The timing reflects growing confidence in ASML’s business trajectory. Analysts see the company entering a multi-year growth cycle powered by increasing demand for advanced lithography equipment.
Lithography intensity is the key metric to watch. This measure is projected to climb toward 26% by 2028 as DRAM manufacturers incorporate more EUV layers into their production processes. Samsung’s competitive recovery and Micron’s faster EUV adoption are fueling this trend.
Tool Demand Surpasses Expectations
Equipment shipment forecasts just got more optimistic. Bank of America now expects ASML to deliver 55 low-NA EUV tools in 2026. That figure jumps to 63 tools in 2027, both numbers above previous projections.
Orders are rolling in faster than anticipated. Analysts predict ASML will book €7.4 billion in orders during the fourth quarter of 2025. That’s considerably higher than the consensus estimate of roughly €6 billion. DRAM and foundry customers are leading the charge.
The company’s most recent earnings release showed strength. ASML posted $6.41 earnings per share, beating the $6.27 estimate. Revenue reached $8.80 billion, just shy of the $8.99 billion consensus.
Margin Expansion Driving Profitability
Financial metrics point to improving profitability. Bank of America forecasts gross margin expansion of approximately 150 basis points. This improvement should generate around 30% earnings growth in the coming year.
Free cash flow is set for a major leap. Projections show FCF doubling to €14 billion as the company works through inventory normalization. By late 2027, ASML plans to return roughly 93% of free cash flow to shareholders.
Capital allocation remains aggressive. The company earmarked €15.5 billion for share buybacks in 2026 alongside €6.4 billion in dividends over the 2026-2027 period. The quarterly dividend now stands at $1.857 per share.
Over the next five years, compound annual earnings growth is expected to hit 18%. Gross margins could expand by 5 percentage points through 2030.
Geographic and Customer Diversification
Risk factors are moderating. Customer concentration concerns are easing as ASML’s client roster broadens. Intel appears to be stabilizing while AI chip manufacturers advance to more sophisticated nodes.
China exposure is normalizing. Revenue from China is expected to settle in the low-to-mid-20% range of total sales. This shift transforms the investment story from defensive to growth-oriented.
Starting in Q1 2026, ASML will stop reporting bookings figures. Instead, management will provide deeper insights into backlog maturity and end-market trends.
Bank of America’s earnings estimates now exceed consensus by 3% for 2026 and 9% for 2027. The firm anticipates mid-single-digit revenue growth for 2026 with stable margins.
Current analyst ratings show 4 Strong Buy, 16 Buy, and 7 Hold recommendations. The average price target sits at $1,093 with shares trading at a P/E ratio of 45.13.
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