Goldman Sachs: ASML Valuation Falls to Five-Year Low, Raises Target Price to 1600 Euros

Goldman Sachs raised its 12-month target price for ASML to €1,600 in its latest research report. The firm reiterated its "buy" rating and pointed out that the stock price has the potential to reach €2,000 in a bull case scenario.

Despite ASML's year-to-date increase of about 45%, its performance is still far behind its peers, which have seen gains exceeding 70%. Currently, ASML's valuation is at the 10th percentile of its range over the past five years, significantly lower than that of its semiconductor equipment peers. The market has not yet fully priced in its monopoly position in the EUV sector and the long-term growth potential brought by AI infrastructure construction.

The resilience of capital expenditures by hyper-scale cloud players is extremely strong: Alphabet recently explicitly raised its expenditure guidance for 2026 and indicated further increases for 2027, which directly boosted the global front-end equipment expenditure expectations. It is expected that AI-related revenue will account for more than 20% of EUV in 2027. The manufacturing inefficiency brought about by the global dispersed factory construction will force fabs to increase equipment investment, further driving the total demand for photolithography machines.

The expansion of wafer fabs such as Samsung Electronics in the advanced process field will break the pattern dominated by a single manufacturer. This structural change will bring higher demand for wafer startups, which is not yet fully reflected in the current stock price. Even if the new generation of high numerical aperture (NA) photolithography machines is delayed, the increased shipments of existing high profit margin equipment can raise earnings per share. This marginal change in product mix actually supports the company's profitability.

The market will next focus on the progress of the transition to the GAA architecture. The process shrink roadmap update expected to be completed by the end of 2026 will become the core leading indicator for the growth and demand explosion of EUV layers. In addition, the huge demand for computing and storage chips from proxy-type AI will also become a potential catalyst for further upward revision of capital expenditure expectations.