UBS raised ASML target price to €2,100, constructive on 2027-28 logic and storage demand momentum

Overview

This is a UBS Q2 earnings preview and valuation update report on ASML. The central conclusion is that the Q2 update and management commentary may strengthen the market’s confidence in 2027-28 growth, especially through improving demand for advanced logic, storage, and China-related demand. UBS therefore raised its medium-to-long-term earnings forecasts and increased the 12-month target price from €1,900 to €2,100, while maintaining a Buy rating.

Core views

The report’s core views have three points: first, FY2026 revenue guidance may move toward the upper end of the €36bn-€40bn range and potentially above it, and gross margins may also approach the high end of the 51%-53% range; second, Chinese revenue and lithography shipments may improve in H2 2026 and in 2027, supported by higher storage intensity, CXMT and YMTC capacity ramp-ups and AI-driven demand for advanced logic, but assuming no further export restrictions; third, the market will likely refocus on ASML’s capacity, and UBS expects management to emphasize improved demand visibility and reaffirm that capacity can be adjusted elastically according to demand.

Analysis framework

UBS combines WFE and TSMC updates, ASML Q2 earnings expectations, company guidance, order and capacity signals, China WFE assumptions, EUV/DUV shipment and revenue forecasts, and a DCF valuation framework to revise 2027-28 earnings and target price. The report also compares UBS forecasts with consensus expectations, and uses historical P/E, EV/Sales, and peer valuation premiums/discounts as supporting checks.

Methodology notes

• Valuation methodsDCF

  DCF valuation

  The €2,100 target price is based on the DCF approach, assuming WACC of 9% and terminal growth rate of 3%; the DCF summary gives enterprise value of €791,890m, equity value of €803,611m, and value per share of €2,100.

• earnings_forecastestimate_revision

  earnings estimate upgrade

  UBS raised 2027E and 2028E EPS by 9% and 14%, mainly reflecting stronger expectations for storage revenue, advanced logic, and China business growth.

• relative_valuationpeer_multiple_comparison

  relative valuation comparison

  The report compares ASML’s 2027E/2028E P/E with the 10-year average and valuations of U.S. peers, noting that ASML is currently at an 8% discount to U.S. peers, while the 10-year historical average is a premium of about 83%.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML HOLDING NV / ASML.AS

  Core coverage name

  Strengths

  Lithography equipment leader, with products critical to semiconductor technology progression; customers include Samsung, TSMC, Intel and Hynix; stronger advanced logic, storage, and China demand support 2027-28 earnings upgrades.

  Weaknesses

  The business is highly sensitive to the semiconductor capex cycle, next-generation EUV execution risk remains, and valuation is sensitive to long-term growth and discount-rate assumptions.

  Comparison

  Main competitors are Nikon and Canon; valuation-wise ASML currently trades at an 8% discount to U.S. peers, while the 10-year historical average is a premium of about 83%.

  Risks

  Weakening macro and end-market semiconductor demand, customers delaying capex orders, tighter export controls, EUV execution risk, and changes in valuation assumptions.

• China Semiconductor Equipment Demand

  Important regional revenue and order driver

  Strengths

  UBS expects improved shipments in the second half and in 2027 from stronger storage intensity, CXMT and YMTC expansions, and AI-driven demand for advanced logic.

  Weaknesses

  The company’s FY2026 guidance implies China revenue around 20% with about 23% year-on-year decline; lithography shipments have fallen about 24% year-on-year year-to-date.

  Comparison

  UBS forecasts China WFE to grow about 7% and estimates China-related revenue decline at about 12%, better than the decline embedded in company guidance.

  Risks

  Further export restrictions could weaken the recovery in China shipments and revenue improvement.

Key data

• 12-Month Target Price€2,100Previously, the target price was €1,900.
• 12-Month RatingBuyThe report maintains a Buy rating.
• Expected Price Appreciation30.3%Forecast price appreciation disclosed in the report.
• Expected Total Return30.8%Composed of forecast price appreciation and 0.6% dividend yield.
• 2026E Revenue Guidance€36bn-€40bnThe company has set this range, and UBS estimates €39.4bn.
• 2026E Revenue Forecast€39.392bnUBS forecast, approximately 20.6% year-on-year growth.
• 2027E EPS Forecast€52.90Raised by 9% from €48.42; consensus is €42.94.
• 2028E EPS Forecast€68.02Raised by 14% from €59.73; consensus is €50.85.
• 2027E Revenue Forecast€55.690bnUBS forecast, 41.4% year-on-year growth.
• 2028E Revenue Forecast€66.869bnUBS forecast, 20.1% year-on-year growth.
• 2026E Gross Margin53.7%UBS forecast, above consensus expectation of 52.4%.
• 2026E EBIT Margin38.3%UBS forecast, above consensus expectation of 36.5%.
• 2027E/2028E P/E30x/24xThe report text states ASML trades at about 30x/24x 2027E/2028E P/E.
• Key DCF AssumptionsWACC 9%, terminal growth rate 3%Valuation methodology and risk disclosures.
• 2028E Bull Case EPS€80The report chart says the upside case may reach €80, UBS base case is €68, and consensus is €51.

Impact & implications

If ASML confirms upward revisions to FY2026 guidance at the Q2 update, stronger advanced logic and storage demand in 2027-28, and sufficient capacity to meet demand, the market may further raise medium-to-long-term earnings expectations. The report’s implications for the semiconductor equipment chain are constructive, especially for EUV, non-China DUV, advanced logic, and storage capex-related parts; however, recovery in China still depends on exports not being tightened further.

Risks

• A weakening macro environment or slower end-market semiconductor demand could lead customers to cut capex and postpone orders.
• Semiconductor capex is highly cyclical, with significant volatility in ASML revenue and orders.
• There is execution risk in next-generation EUV technology.
• If export restrictions tighten further, China-related demand and shipment recovery may fall short of expectations.
• DCF valuation is sensitive to assumptions on WACC, terminal growth, long-term margins, and cash flows.

What to watch

• ASML Q2 2026 results on July 15 and management commentary on the 2027-28 outlook.
• Whether FY2026 revenue guidance moves to the upper end or above the €36bn-€40bn range.
• Whether gross margin guidance improves toward the high end of the 51%-53% range.
• Whether China lithography shipments improve in H2 2026, especially related to CXMT, YMTC and advanced logic demand.
• Management commentary on 2027 capacity for systems above 80, demand visibility, and capacity flexibility.
• EUV and non-China DUV revenue growth, and changes in customer capex for storage and advanced logic clients.