Goldman Sachs reiterates ASML Buy rating, raises 12-month target price to €1,600

Overview

This report is Goldman Sachs' company research and rating update on ASML Holding. Following its earlier view that the stock could reach €1,200, the firm remains constructive on ASML, arguing that several key catalysts have gradually materialized over the past few months, including an upward revision to AI infrastructure capex, tight demand for leading-edge logic and memory, resilient China revenue expectations, and the rising importance of EUV lithography in advanced nodes. Based on a more positive medium-term demand and earnings outlook, Goldman Sachs reiterates a Buy rating and raises the 12-month target price to €1,600.

Core views

The core view is that ASML's current share price still undervalues four value drivers. First, AI demand is stronger than previously expected, and hyperscaler capex as well as tight supply/demand in leading-edge chips are increasing visibility into demand for EUV tools. Second, the market is discounting China revenue too heavily, while the company still guides for China to account for about 20% of revenue in 2026, and peer commentary also points to steadier regional demand. Third, progress by customers such as Samsung at advanced logic nodes may broaden the base of leading-edge manufacturers, driving higher global wafer starts and equipment demand. Fourth, as the industry transitions from FinFET to GAA and then re-accelerates node shrinkage, growth in EUV layer counts may still be underappreciated by the market.

Analysis framework

The report uses a scenario-based fundamental framework, mapping ASML's share price to key 2027 KPI assumptions and comparing the current share price, bear case, 12-month target case, and bull case across variables such as AI contribution, China revenue mix, manufacturing inefficiency, EUV layer counts, and WFE scale. The report also compares ASML's two-year forward P/E with global semiconductor capital equipment peers, arguing that ASML has historically traded at about a 20% valuation premium to peers, while it now trades at only a slight discount, which does not match its AI exposure, EUV monopoly position, and stronger competitive moat.

Methodology notes

• fundamental_value_frameworkASML Four-Pillar Investment Framework

  AI demand growth, China revenue exposure, manufacturing inefficiencies caused by customer market structure, and growth in EUV layer counts

  Goldman Sachs uses these four variables to explain ASML's medium-term revenue and valuation upside, and infers the market's current implied assumptions from different share price scenarios.

• Valuation methodsCY27E P/E Target Price Method

  Applying a 37x CY27E P/E multiple to the updated EPS forecast yields a 12-month target price of €1,600.

  The report keeps the 37x valuation multiple unchanged; the higher target price mainly reflects higher EPS and a more positive outlook for EUV Low NA tool revenue.

• peer_comparisonGlobal Semiconductor Equipment Peer Valuation Comparison

  Compares ASML's performance and valuation premium/discount versus global semiconductor capital equipment peers such as ASMI, BESI, AMAT, LAM, and KLA.

  The report argues that ASML's current slight discount versus peers is unjustified because its AI-linked growth, China revenue resilience, and EUV monopoly should support a higher valuation.

• factor_profileGS Factor Profile

  Goldman Sachs uses Growth, Financial Returns, Multiple, and Integrated to compare stocks on a relative basis.

  This framework provides background on the stock's investment attributes, but the report's main conclusion comes from ASML's fundamental four-pillar framework and valuation scenario analysis.

Asset mapping & comparison

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

• ASML Holding (ASML.AS)

  Core coverage name

  Strengths

  EUV lithography monopoly position, growth in AI-related advanced logic and memory demand, resilient China revenue expectations, higher equipment demand from expanding advanced-node customers, and a valuation that is not expensive relative to peers.

  Weaknesses

  The pace of High NA adoption remains uncertain, the stock has already risen from earlier levels, and it is still exposed to semiconductor capex cyclicality.

  Comparison

  The report notes that ASML's year-to-date gains trail the broader European technology hardware sector and peers such as ASMI, BESI, AMAT, LAM, and KLA; it now trades at a slight discount to peers, whereas historically it has usually traded at about a 20% premium.

  Risks

  EUV delivery or adoption delays, a decline in customer capex, unfavorable market share shifts, and tighter China export restrictions.

• Global semiconductor capital equipment peers

  Valuation and performance benchmark

  Strengths

  AI, advanced logic, memory, and WFE upcycle provide broad support to the industry.

  Weaknesses

  Different companies have different exposure to EUV, advanced nodes, and China demand.

  Comparison

  ASMI, BESI, AMAT, LAM, and KLA have outperformed ASML year to date, which the report views as unjustified.

  Risks

  Semiconductor equipment order cycles, customer budget changes, trade restrictions, and valuation compression.

• AI infrastructure and leading-edge semiconductor demand

  Demand driver for ASML

  Strengths

  Hyperscaler capex upgrades, AI revenue and order growth, and tight supply/demand in leading-edge logic and memory all improve visibility into EUV tool demand.

  Weaknesses

  The market worries whether AI capex will peak after 2026 and whether enterprise AI adoption will be fast enough.

  Comparison

  The report believes recent data points have eased some concerns and made it more likely that AI-related lithography demand will flow through to ASML.

  Risks

  A slowdown in AI infrastructure investment, weaker-than-expected HBM or CPU demand, and shifts in customer inventory or capacity build schedules.

Key data

• RatingBuyGoldman Sachs reiterates its Buy rating on ASML.
• 12-month target price€1,600Prior target was €1,570, based on 37x CY27E P/E.
• Bull case valuation€2,000The report says this scenario corresponds to roughly the 60th percentile valuation premium and is not considered demanding.
• 2026/2027 WFE spending expectations$141bn / $186bnUpdated forecasts from Goldman Sachs' U.S. semiconductor team, implying 28%/32% year-over-year growth.
• Hyperscaler capex forecasts$918bn / $1.02trnForecasts for 2027/2028, up 28%/11% from $720bn in 2026, respectively.
• Estimated ASML 2026/2027 revenue growth+22% / +24% (in euro terms)ASML revenue growth estimate under the target price scenario; in U.S. dollar terms, roughly +27%/+24%.
• AI contribution to EUV revenueHigh-20% range in 2027The report's current estimate is above the prior mid-20% range; the bull case assumes the mid-30% range.
• China revenue mix assumptionAbout 19% in 2027Assumption under the 12-month target price scenario; the current share price implies about 18%, while the bear/bull cases are 17%/20%.
• EUV layer count assumption24 layers in 2027Low NA-equivalent layer count used for the logic application under the 12-month target price scenario; ASML's 2030 guide is 25-30 layers.
• Year-to-date share price performanceAbout +45%The report notes that while ASML has risen, it still lags European technology hardware and some global semiconductor equipment peers.

Impact & implications

The report is constructive on ASML's investment implications: if AI infrastructure demand continues to exceed expectations, China revenue remains resilient, the leading-edge customer base broadens and drives more wafer starts, and growth in EUV layer counts materializes, ASML's valuation could regain a premium relative to global peers. For the semiconductor equipment chain, the report reinforces that advanced nodes, EUV, and AI compute capex remain the key medium-term themes; for investors, ASML is viewed as one of the better near-term AI exposures within European semiconductor equipment.

Risks

• EUV tool delivery, customer adoption, or High NA ramp-up proceeds more slowly than expected.
• A downturn in the semiconductor capex cycle causes WFE spending and ASML orders to miss expectations.
• Adverse changes in customer market share or advanced-node competitive dynamics reduce incremental demand for ASML.
• An escalation in China-related export restrictions affects China revenue mix and gross margin contribution.
• AI infrastructure capex or enterprise AI adoption falls short of current optimistic expectations.

What to watch

• Further guidance from hyperscalers on AI infrastructure capex for 2026 and 2027.
• Comments from TSMC, Samsung, and leading logic/memory manufacturers on advanced-node capacity expansion and equipment spending.
• ASML's latest guidance on China revenue mix, orders, and the impact of export restrictions.
• Roadmap updates on leading-edge node shrinkage and EUV layer growth after the GAA transition is completed.
• The adoption timeline for High NA EUV tools and the impact of Low NA replacement demand on revenue and margins.
• Whether ASML's valuation premium versus global semiconductor equipment peers recovers.