UBS raises ASML target price to €1,600, maintains Buy rating

Overview

This is an earnings review report on ASML from UBS. The core conclusion is that after its first-quarter results, ASML showed stronger demand from advanced logic chips and memory, capacity is improving, and over the next few quarters there may be high-value catalysts such as High-NA orders. UBS therefore raised its 2026-2028 EPS forecasts by 3%-5% and maintained a Buy rating.

Core views

UBS believes ASML's key drivers come from three areas: first, demand for advanced logic and memory chips is stronger than expected, prompting the company to raise its full-year revenue growth outlook; second, demand for Low-NA EUV and DUV remains supported, and although China revenue expectations were cut, overall group growth is stronger; third, High-NA equipment may need to be ordered in the second half of 2026 in order to enter HVM tool usage in 2028, which could create order catalysts over the next few quarters.

Analysis framework

The report combines post-Q1 earnings forecast revisions, EUV shipment forecasts, EUV revenue by end market, DRAM wafer fabrication demand, changes in DUV revenue from China, DCF valuation, and relative valuation metrics to assess ASML's earnings and valuation upside.

Methodology notes

• Valuation methodsDCF

  Discounted cash flow valuation

  The €1,600 target price is based on a DCF model, with key assumptions including a 9% weighted average cost of capital and a 3% long-term growth rate.

• earnings_forecastEPS revision

  Earnings forecast upward revision

  After Q1 results, UBS raised its 2026-2028 EPS forecasts by 3%-5% to reflect revenue growth and improving demand.

• industry_supply_demandEUV shipment forecast

  EUV shipment and capacity analysis

  The report focuses on the 2026 capacity guidance of at least 60 Low-NA EUV units and at least 80 units in 2027, as well as the extent to which higher throughput on the next-generation model can offset the gap versus actual demand.

• relative_valuationP/E comparison

  Relative valuation using P/E

  Based on expected 2027 EPS of €45, ASML trades at about 27.5x P/E, below the historical average of around 29x.

Asset mapping & comparison

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

• ASML HOLDING NV / ASML.AS

  Core covered name

  Strengths

  Leads the semiconductor lithography equipment field, with EUV equipment having virtually no comparable competitor, and benefits from growth in advanced logic, HBM, and DRAM demand.

  Weaknesses

  Capacity constraints remain a key investor concern, and China revenue expectations were lowered.

  Comparison

  Based on expected 2027 EPS of €45, it trades at about 27.5x P/E, below the historical average P/E of 29x; versus large-cap U.S. stocks, the 12-month forward P/E premium is about 12%, below the 10-year average premium of 84%.

  Risks

  A slowdown in semiconductor capex cycles, order delays or cancellations, implementation risk for next-generation EUV technology, and a deteriorating macroeconomic environment.

• TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD / TSM.US

  Important customer and demand catalyst counterpart

  Strengths

  Strong demand for advanced logic chips, and TSMC's symposium may provide industry updates.

  Weaknesses

  The report does not provide an independent valuation for TSMC.

  Comparison

  One of the important sources of demand for ASML's advanced logic business, and highly correlated with ASML's equipment order cycle.

  Risks

  If the pace of advanced-node capex is below expectations, ASML's order visibility will be affected.

• INTEL CORP / INTC.US

  One of ASML's customers

  Strengths

  Expansion in advanced-node capacity could drive EUV demand.

  Weaknesses

  The report does not provide an independent investment rating or valuation conclusion for Intel.

  Comparison

  Included as one of the logic chip customers in the EUV shipment forecast.

  Risks

  If Intel's capex or process-node progress is delayed, ASML equipment demand could be affected.

• Samsung Electronics / 005930.KS

  One of ASML's customers

  Strengths

  Both logic and DRAM businesses could contribute to EUV demand.

  Weaknesses

  The report does not provide an independent investment rating or valuation conclusion for Samsung.

  Comparison

  Listed as a logic and DRAM customer in the EUV shipment forecast.

  Risks

  Volatility in the memory cycle may affect its purchasing pace for ASML equipment.

• SK Hynix / 000660.KS

  One of ASML's customers

  Strengths

  Improvement in HBM and memory demand is favorable for related equipment purchases.

  Weaknesses

  The report does not provide an independent investment rating or valuation conclusion for SK Hynix.

  Comparison

  As a memory customer, it is tied to growth in ASML's DRAM wafer fab revenue.

  Risks

  If DRAM and HBM demand falls short of expectations, equipment orders could weaken.

Key data

• Target price€1,600Raised from the previous €1,500.
• Current price€1,230As of 2026-04-15.
• RatingBuyUBS maintains a Buy rating.
• 2026-2028 EPS forecast changeUp 3%-5%Reflects revenue growth and strong demand from advanced logic and memory.
• 2027 EPS versus consensus10%-15% aboveUBS expects 2027 EPS to be significantly above the market average.
• Full-year revenue growth guidance10%-22% YoYPreviously 4%-19%.
• UBS expected 2026 group revenue growth22% YoYDriven by advanced logic and memory demand.
• China revenue expectationDown 10% YoY in 2026Previously expected to decline by 1%, but still better than the company's guidance midpoint of about a 20% decline.
• Low-NA EUV capacityAt least 60 units in 2026, at least 80 units in 2027The company is trying to ease investor concerns about capacity.
• UBS view on actual 2027 demandAround 75 unitsBelow some investors' expectations of more than 80 units, because the new model has higher throughput.
• Next-generation EUV throughput improvement13%-18% higher than the E model, and more than 50% higher than the D modelThe D model's throughput in 2026 is about 220-230 wafers per hour, while the new model exceeds 260 wafers per hour.
• 2025-2030 EPS CAGR21%UBS expects ASML's medium-term earnings to continue growing strongly.

Impact & implications

The report is positive on ASML, arguing that capacity and order catalysts will ease market concerns about supply bottlenecks and support upward revisions to earnings forecasts. If capital spending related to advanced logic, HBM, and DRAM continues to improve, ASML's order and revenue visibility may increase; at the same time, current valuation is not materially expensive versus historical averages, which supports the Buy rating.

Risks

• A deteriorating macroeconomic environment could lead semiconductor companies to reduce capex spending.
• A slowdown in semiconductor end markets could delay or cancel customer orders for ASML.
• Customer businesses are cyclical, leaving ASML with relatively high operating risk.
• There is execution risk in the next-generation EUV technology.
• China revenue expectations were lowered, and geopolitical and demand-structure changes may affect DUV revenue.
• DCF valuation is sensitive to WACC, long-term growth, and earnings forecast assumptions.

What to watch

• Whether TSMC's symposium releases updates on advanced logic and equipment demand.
• Whether High-NA orders appear as expected in the second half of 2026.
• Whether Low-NA EUV capacity reaches 60 units in 2026 and more than 80 units in 2027.
• Whether HBM, DRAM, and advanced logic capex remains strong.
• Whether the decline in China DUV revenue stays around UBS's expected 10% YoY decrease.
• Whether 2027 EPS can meet UBS's view of being 10%-15% above consensus.