ASML Strong AI momentum, memory cyclicality and market share risks
Over the past months, the strength of the AI cycle has been remarkably strong, reflected in significant increases in hyperscalers' CapEx, which have supported higher revenues for semiconductor manufacturers and driven incremental investments. Memory, in particular, benefitted from the strong increase in demand. We expect a strong year for ASML in 2026, but remain cautious on 2027 and beyond, mainly due to revenue and CapEx cyclicality at memory players and market-share expectations for ASML post 2026 that do not reflect the technology roadmap. Applying our multiple based valuation to an equally weighted FY27 and FY28 diluted EPS results in a target price of €1,175 per share and we therefore reiterate our Hold recommendation.ASML Holding provides lithography systems for the semiconductor industry, manufacturing machines that are used in the production of integrated circuits or chips. Co. develops, produces, markets, sells and services advanced semiconductor equipment systems exclusively consisting of lithography systems. Co. sells its products to micro-processor manufacturers and Foundries, NAND-Flash memory and DRAM memory chipmakers. Co.'s products line includes the following: PAS 5000 lithography systems, which Co. no longer manufactures but continues to refurbish; PAS 5500 products; TWINSCAN DUV systems and TWINSCAN EUV systems based on a new platform utilizing the concepts of the TWINSCAN platform.
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