After navigating a challenging period, Dutch semiconductor equipment manufacturer ASML is showing signs of a potential recovery. In a notable shift, UBS has upgraded its rating on the company’s shares from “Neutral” to “Buy,” a move that follows a year where the stock declined by 20%. This bullish stance from the Swiss bank, which arrives amid lingering skepticism from other analysts, suggests the worst of the downturn may be over.
The upgrade is anchored on the belief that all known headwinds are now fully reflected in the share price. According to UBS analyst Francois-Xavier Bouvignies, concerns over weaker demand for lithography systems and ongoing uncertainties related to the Chinese market are already priced in.
UBS has set a new price target of 750 euros, a significant increase from its previous target of 660 euros. The bank’s forward-looking analysis is particularly striking, as it forecasts that ASML will achieve annual profit growth of 20 percent between 2026 and 2030. This projected acceleration is tied to imminent technological advancements in the chip industry.
Should investors sell immediately? Or is it worth buying ASML?
Two key developments are expected to be major catalysts. First, the new A14 processor node from TSMC is anticipated to drive renewed demand for ASML’s extreme ultraviolet (EUV) lithography systems. Second, the company’s groundbreaking next-generation High-NA EUV technology is on the verge of a commercial breakthrough. By the end of the decade, these advanced machines could contribute 15 to 20 percent of total company revenue, highlighting the immense growth potential for this monopolist in cutting-edge chip manufacturing.
However, this optimistic view is not universally shared. Other financial institutions have recently expressed caution. On September 2, Bank of America reduced its price target, citing macroeconomic uncertainties and potential tariff risks, with particular concern over sluggish demand from China. Similarly, both Erste Group and Freedom Broker have recently downgraded their ratings to “Hold.”
The upcoming quarterly report on October 15 is poised to be a critical test for these competing viewpoints. When ASML releases its third-quarter earnings, it will provide crucial insights into its current order book. While company management has thus far reaffirmed its full-year revenue guidance of 30 to 35 billion euros, investors are expected to scrutinize every detail of the report for clues about the company’s trajectory amidst conflicting market signals.
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