Goldman Sachs Raises European Hardware Stock Price Targets on AI-Driven Growth

Overview

This report updates earnings forecasts and 12-month price targets for four core companies in the European hardware sector (ASML, ASMI, BESI, Nebius), primarily based on recent positive industry data including rising AI adoption rates and strong semiconductor equipment demand. Institutions view demand in AI infrastructure and semiconductor capital equipment as healthy, raising price targets for most companies while maintaining Buy ratings.

Core views

Demand Side: AI infrastructure demand continues to exceed supply, with Nvidia H100/A100 GPU prices rising 20%/15% YTD respectively; sovereign AI revenue up 80% YoY reflects increased government investment. In the memory sector, SK Hynix plans to double wafer capacity over five years, with robust HBM demand supporting multi-year investment cycles. China fab spending is expected to remain flat or increase slightly in 2026, showing stronger-than-expected equipment demand resilience. Company Adjustments: ASML上调ed 2027-2030 revenue forecasts by 1-2% due to strong China DUV tool demand (especially immersion), with gross margin improvements driving EPS forecast upgrades of 1-2%. ASMI benefits from demand for advanced logic chips (GPU/CPU) in AI applications, with 2027-2030 revenue forecasts raised by 2%. BESI saw mainstream packaging business demand exceed expectations, leading to a 3% uplift in 2027-2030 revenue forecasts. Nebius had 2026 revenue forecasts lowered by 2% due to short-term ramp adjustments but maintains long-term upside from new UK facility investments (65MW capacity) and pricing advantages, with 2027-2030 revenue forecasts raised 2-9%.

Analysis framework

The institution employs a combination of top-down industry analysis and bottom-up company verification: first confirming industry momentum through high-frequency data on storage, AI infrastructure, and China equipment spending, then adjusting earnings models based on each company's business exposure (e.g., ASML's reliance on China DUV, Nebius' exposure to AI data centers). Valuation uses CY27 P/E and EV/EBITDA multiples, dynamically adjusted against demand outlooks (e.g., ASML's P/E rising from 37x to 40x).

Methodology notes

• Valuation MethodologyPE/PEG valuation

  Apply P/E multiples to CY27 estimated EPS

  The report calculates target prices for companies like ASML by multiplying 2027 estimated EPS by P/E multiples (e.g., 40x); adjustments to P/E multiples reflect changes in demand outlooks (e.g., increased China demand elevates multiples).

• Industry/Sector Analysis FrameworkSupply-demand framework

  AI infrastructure demand continuously exceeds supply

  Supply-demand gaps are verified through GPU price increases (H100 up 20%) and capacity expansion data (SK Hynix doubling capacity), supporting growth narratives for equipment vendors and cloud service providers.

• Cycle & Momentum FrameworkMomentum Inflection Analysis

  China wafer fab spending expected to be flat or slightly up in 2026

  China equipment spending data serves as an indicator of global semiconductor cycle resilience; better-than-expected performance supports upward revisions to equipment vendor demand forecasts (e.g., ASML).

Asset mapping & comparison

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

• ASML Holding (ASML.AS)

  Benefits from strong China DUV tool demand and global storage investment cycles

  Strengths

  Stable demand for immersion lithography machines; China contributes to gross margin improvement

  Weaknesses

  Risk of EUV technology delays

  Comparison

  More reliant on China logic/memory demand compared to peers

  Risks

  Capital expenditure cyclicality, market share shifts

• Nebius Group (NBIS.US)

  Directly benefits from AI data center expansion and GPU pricing advantage

  Strengths

  New UK facility with 65MW capacity to come online in 2027; strong pricing power

  Weaknesses

  Short-term capacity ramp delays

  Comparison

  Shorter contract terms compared to hyperscale cloud providers

  Risks

  Competition from hyperscalers, slowing AI adoption

Key data

• ASML Target Price€1770 (previous €1600)Based on 40x CY27 P/E, reflecting strong China demand
• Nebius Target Price$267 (previous $234)Based on 9x CY27 P/S, benefiting from AI pricing advantage
• SK Hynix Capacity PlanDouble wafer capacity within five yearsStrengthens storage investment cycle; HBM demand remains robust
• Nvidia Sovereign AI Revenue>80% YoY growth in 1QFY27Government investment supports AI ecosystem
• China Fab SpendingFlat or slight increase in 2026Equipment demand resilience exceeds expectations

Impact & implications

The report argues that the AI infrastructure investment cycle will extend beyond 2027, directly benefiting European hardware equipment vendors (ASML, ASMI, BESI) through logic/memory chip expansion, while cloud service providers like Nebius capture AI inference demand via capacity expansion. Multiple upgrades reflect improved visibility into industry growth, though investors should watch for capex cycle volatility and intensifying competition risks.

Risks

• EUV technology delays affecting ASML's long-term growth
• Cyclical fluctuations in semiconductor capital expenditure
• AI adoption falling below expectations
• Intensifying competition from hyperscale cloud providers

What to watch

• Actual 2026 spending data from Chinese wafer fabs
• Sustainability of Nvidia's sovereign AI revenue growth
• Ramp-up progress of Nebius' UK facility
• Changes in HBM demand for memory chips