UBS Raises ASML Target Price to 1900 Euros, Reiterates Its Status as Europe's Preferred Stock

UBS reiterated ASML as the preferred stock pick in the European semiconductor sector on Wednesday, raising the target price from €1,600 to €1,900 and maintaining a buy rating. ASML's stock price rose by 3.5% at one point in Amsterdam trading, and was up about 2.8% in pre-market US trading.

UBS analyst François-Xavier Bouvignies pointed out in the research report that ASML's current valuation only has a 6% premium over its large-cap US peers, far below the historical average of 84% over the past decade.

This year to date, ASML's stock price has accumulated a gain of about 40%, while competitors AMAT, KLA, LAM generally have gains between 48% to 70%, and its customers Micron and SK Hynix have performed far better, leaving ASML behind.

UBS believes that this relative underperformance itself constitutes a buying opportunity, and characterizes ASML as "the most attractive risk-reward stock in the sector".

UBS's bullish logic is based on three dimensions.

First, the market worries that ASML could become a bottleneck in semiconductor supply, UBS clearly refutes this. The research report estimates that ASML's capacity in 2027 can support a growth of over 50% in cutting-edge wafer output year-over-year, while expected demand growth is only 25% to 30%, and capacity pressure will not constitute a substantive constraint in the next 12 to 18 months.

Second, UBS emphasizes that ASML's high exposure to the memory chip market is underestimated by the market. Based on the revenue structure in 2026, the memory business accounts for about 30% to 35%, higher than the 25% to 30% of US peers, and has materialized into a stronger historical growth rate - the compound annual growth rate of ASML's memory business from 2020 to 2025 reached 23%, while competitors were about 6%. With DRAM node scaling driving the continuous increase in lithography intensity, this advantage is expected to continue through 2028.

Third, despite TSMC's delay in adoption time, UBS believes the long-term application prospects of ASML's next-generation High NA EUV technology remain clear. UBS estimates that High NA EUV can save 20% to 40% on costs in key process layers compared to alternative patterning solutions, with throughput increasing by more than 100%, and is expected to enter a substantive adoption phase within two to three years.

On earnings forecasts, UBS raised the earnings per share estimate for 2027 to €48.42 and €59.73 for 2028, both 15% to 20% higher than the market consensus.