On Tuesday, Barclays (LON:BARC) upgraded ASML Holding NV (LON:0QB8) (AS:ASML:NA) (NASDAQ: ASML) stock from Equalweight to Overweight and increased the price target to €1,150 from the previous €930.
The adjustment followed a period of decline in ASML's stock value, which Barclays attributed to multiple factors, including concerns over China, discussions around the return on investment in artificial intelligence (AI), and a tempered outlook for 2025 after the second quarter of 2024, along with broader market trends.
Despite ongoing debates regarding these issues, Barclays sees the recent drop in ASML's share price as a favorable chance to invest in what it considers one of the most reputable companies on a global scale. The firm notes that other companies within its coverage might face greater immediate risks through 2025.
However, Barclays is optimistic about ASML's prospects for 2026, expecting the company to benefit from new fabrication plant builds, the ramp-up to 2-nanometer technology, postponed business from 2025, and sustained AI investments.
Barclays forecasts a 15% year-over-year growth for ASML in 2026, following a projected 27% growth in 2025. The firm also anticipates continued double-digit growth for ASML in the subsequent years, 2027 and 2028. The demand for AI is believed to be softening the cyclical nature of demand for cutting-edge technology, according to Barclays.
In their detailed analysis, Barclays' bottom-up Extreme Ultraviolet (EUV) model predicts a demand for over 100 EUV low-NA units in 2026-27. Additionally, they expect high-NA demand to reach the upper end of ASML's 2030 guidance as early as 2029-30, indicating a strong long-term outlook for the company's technology and market position.
In other recent news, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) recently reported financial results that exceeded consensus forecasts for both revenue and earnings, despite a slight miss on gross margins for the second quarter of 2024. Needham reaffirmed its Buy rating on TSMC shares, maintaining a steady price target of $210.00. The firm's analysis also indicated an optimistic outlook for TSMC for the fiscal year 2025.
In related developments, ASML Holding NV, a significant player in the semiconductor industry, reported a slight miss in its third-quarter revenue guidance. Despite this, Wolfe Research maintained an Outperform rating on ASML, attributing the revenue shortfall to timing issues and projecting significant revenue improvement in the second half of 2024.
Global markets, particularly in the technology sector, are experiencing increased volatility due to the potential imposition of stricter U.S. export controls on semiconductor chips to China. This has sparked significant sell-offs in tech shares, impacting companies like ASML and TSMC.
Lastly, ASML, a leading supplier of equipment to semiconductor manufacturers, is expected to announce a substantial increase in new orders in its second-quarter earnings, benefiting from a surge in demand for artificial intelligence (AI) chips. The company's shares have climbed 45% this year, trading near record highs and significantly outpacing the STOXX Europe 600 tech index.
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