UBS analysts project that ASML Holding NV's stock could rise by nearly 50% over the next 12 months. The analysts believe the company stands to benefit from increasing memory demand and growth in technology investments.
They have identified the Dutch firm, which produces the most advanced lithography machines for chip manufacturing, as one of their preferred stocks. The analysts have raised their price target from a previous 1,600 euros to 1,900 euros, setting a new market high. This forecast is considered bold, given the stock has already surged 40% year-to-date.
"This reflects increased confidence in a tightening industry environment, which will extend the investment cycle through 2028," stated the analyst team led by Francois-Xavier Bouvignies in a client report. They added that ASML is "one of the companies in the European semiconductor sector that still offers an attractive risk/reward profile."
UBS's optimism for ASML is based on the company's potential to achieve faster-than-expected earnings growth as firms race to build computing power for more advanced AI technologies. The analysts note that the stock's projected 2027 price-to-earnings ratio of 26 times is below its 12-month average of 30 times.
At 3:21 PM Amsterdam time, the stock was up 3.8% to 1,295.80 euros.
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