TLDR
- UBS reinstated ASML as its top European semiconductor pick and raised its price target to €1,900 from €1,600.
- ASML stock rose 3.5% in Amsterdam following the UBS note.
- UBS forecasts EPS of €48.42 in 2027 and €59.73 in 2028, roughly 15–20% above consensus.
- ASML CEO Christophe Fouquet said the first chips made with High-NA EUV machines will arrive within months.
- TSMC said it will stick with ASML’s current EUV product for now, while Intel and SK Hynix plan to adopt High-NA.
ASML stock climbed 3.5% in Amsterdam trading on Tuesday after UBS reinstated the Dutch chip equipment maker as its top pick in the European semiconductor sector and lifted its price target to €1,900, up from €1,600.
The move came alongside a bullish research note from UBS analyst Francois-Xavier Bouvignies, who said ASML now offers the “most attractive risk/reward in the sector.”
Despite being the world’s largest chip equipment maker, ASML has lagged its peers this year. The stock is up around 40% year-to-date, compared to gains of 48% to 70% for rivals including Applied Materials, KLA, and Lam Research.
UBS sees that gap as an opportunity. The bank noted ASML trades at just a 6% premium to U.S. large-cap peers on a 12-month forward price-to-earnings basis. Its 10-year average premium is 84%.
Memory Exposure Seen as Underappreciated Driver
One of UBS’s core arguments centers on ASML’s memory market exposure. The bank described ASML as “the most memory-exposed semi-cap name,” with roughly 30–35% of revenues tied to memory by 2026, compared to 25–30% for U.S. peers.
That exposure has already delivered stronger growth. ASML posted a 23% memory revenue compound annual growth rate between 2020 and 2025, versus around 6% for peers. UBS expects that to continue as DRAM node shrinks drive increased lithography demand through 2028.
UBS also pushed back on fears that ASML could become a supply bottleneck for the broader chip industry. The bank estimates ASML’s 2027 capacity can support more than 50% year-on-year growth in leading-edge wafer output, well ahead of projected demand growth of around 25–30%.
After revising its models, UBS now forecasts EPS of €48.42 in 2027 and €59.73 in 2028 — roughly 15–20% above current consensus.
CEO Points to High-NA Chips Arriving Within Months
Meanwhile, ASML CEO Christophe Fouquet addressed questions around the company’s next-generation High-NA EUV technology at an industry conference in Antwerp on Monday.
Fouquet said the first chips produced on High-NA machines are expected within months, pointing to customers in both memory and logic.
“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 machines can cost up to $400 million each. They are capable of producing chip features up to 66% smaller than current technology.
Intel has been the most aggressive in preparing to adopt the tools, while memory chipmaker SK Hynix has also confirmed plans to use the technology.
TSMC, ASML’s largest customer, said last month that High-NA machines are too expensive for now. TSMC executive Kevin Zhang said the company will stick with current EUV for several more chip generations, using design innovations instead of smaller features to stay competitive.
UBS said the High-NA adoption case remains intact despite TSMC’s hesitation. The bank estimates High-NA can deliver cost savings of 20–40% on critical layers compared to alternative patterning approaches, and sees broad adoption within two to three years.
Fouquet added that the AI boom is expected to keep chip sales growing by around 20% per year in the coming years, and pointed to chipmakers like TSMC and Samsung as the real bottleneck for AI expansion — as they must build out production and buy more ASML equipment to do so.
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