ASML stock initiated at Market Perform by Bernstein on EUV concerns

Bernstein SocGen Group initiated coverage of ASML Holding (AS:ASML) NV (NASDAQ:ASML), a prominent semiconductor equipment manufacturer with a $301 billion market cap, with a Market Perform rating and a price target of EUR700.00, citing concerns about the company’s extreme ultraviolet (EUV) lithography business. According to InvestingPro data, ASML currently trades at a premium valuation with a P/E ratio of 30x.

The firm acknowledged ASML’s "undisputed" dominance in EUV lithography but expressed concern that EUV lithography is consuming too much of leading-edge logic capital expenditure with diminishing returns. Despite these concerns, ASML maintains strong fundamentals with a 52% gross profit margin and 17.7% revenue growth in the last twelve months. Bernstein expects EUV capital expenditure intensity to decrease from the 3nm node for logic chips and from the D1d node for DRAM memory.

Bernstein forecasts that new transistor structures and advanced packaging, rather than lithography, will drive continued transistor miniaturization. The firm’s 2030 EUV revenue projection falls 24% below ASML’s own guidance.

The research note also highlighted that ASML had approximately EUR5 billion in overshipment of deep ultraviolet (DUV) tools to China during 2023-25, representing about 40% of its 2024 DUV revenue, which "needs to be digested."

Bernstein projects ASML’s growth will align with wafer fabrication equipment (WFE) at a 7% compound annual growth rate from 2024 to 2030, with the firm’s 2030 revenue forecast 18% below consensus and at the low end of company guidance.

In other recent news, ASML Holding NV reported its first-quarter revenue for 2025 at €7.7 billion, with a gross margin of 54.0% and earnings per share (EPS) of €6.00, surpassing market expectations. Despite a notable 44% drop in bookings to €3.9 billion compared to the previous quarter, the company’s outlook for 2025 and 2026 remains stable, as noted by TD Cowen. Meanwhile, Barclays (LON:BARC) downgraded ASML’s stock rating from Overweight to Equalweight, citing muted growth prospects and potential delays in adopting high numerical aperture technology. Wells Fargo (NYSE:WFC) adjusted its price target for ASML to $840, maintaining an Overweight rating while considering the impact of U.S. tariffs on the company’s operations. Deutsche Bank (ETR:DBKGn) also lowered its price target to €700 but retained a Buy rating, acknowledging recent challenges such as setbacks in foundry operations and geopolitical tensions.

Raymond (NSE:RYMD) James revised its price target to $850, maintaining a Strong Buy rating due to ASML’s gross margin strength and potential growth drivers like AI demand and EUV lithography technology. ASML reiterated its revenue guidance for 2025, aiming for €30-€35 billion, with expectations of increased demand from China, which could account for over 25% of the total revenue. Despite the challenges, ASML’s management remains optimistic about future growth, with 2026 anticipated as a year of expansion.

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