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Investing.com -- UBS on Thursday upgraded ASML stock to Buy, arguing that the semiconductor equipment maker is set to re-emerge as a “quality compounder” after a period of underperformance.
The bank lifted its price target to €750 from €660, implying a 19% upside from the stock’s last close at €647.60.
The upgrade follows a 20% decline in ASML shares over the past year, which UBS said reflected well-understood risks, including weaker lithography intensity and uncertainty around the Chinese market.
“Given ASML’s long product lead times and high level of integration into customers’ long-term roadmaps, the market is likely to look through a relatively well telegraphed weak 2026E to 2027E, when we see the return of ASML as a quality compounder delivering 20% EPS CAGR 2026-30E,” analyst Francois-Xavier Bouvignies wrote.
Bouvignies expects a turning point in 2027, driven by the production ramp of TSMC’s A14 logic node, which should lift extreme ultraviolet (EUV) exposures from 19–22 to 20–24 layers, and by fading uncertainty around Intel and Samsung.
The analyst also sees High-NA EUV tools as a major growth driver, forecasting meaningful adoption from 2027-28 and estimating that these systems could represent 15-20% of ASML’s sales by the end of the decade.
While the long-term story is anchored in 2027 and beyond, Bouvignies pointed out several nearer-term catalysts, including clarity on incremental EUV exposures and High-NA adoption at industry events in early 2026, commentary from ASML in quarterly results, the launch of a new low-NA EUV model in the second half of 2026, and potential new customer announcements at Intel and Samsung.
China remains a risk, with ASML’s revenues from the region expected to fall 12% this year and another 20% in 2026, before normalizing at around 15-20% of sales from 2028 onwards. Still, UBS believes the overhang is becoming more manageable.
On the valuation front, ASML trades at about 24 times 2027 earnings, below its 10-year average of 28 times. UBS raised its post-2027 EPS forecasts by 4-7% to reflect confidence in High-NA adoption, driving the higher target price.