ASML Stock: Bank of America Names Chip Equipment Maker Top Semiconductor Pick for 2026

TLDR

• Bank of America upgrades ASML to top semiconductor pick for 2026 with price target raised to €1,158 from €986
• JPMorgan lifts price target to $1,275 from $1,175, shares rise 1.9% on the news
• ASML expects to ship 55 low-NA EUV tools in 2026 and 63 in 2027, above previous forecasts
• Free cash flow projected to double to €14 billion with 30% earnings growth expected
• Stock currently trades at $1,108.78 with market cap of $436 billion and P/E ratio of 45.13

ASML just caught the attention of Wall Street’s biggest banks. Bank of America placed the Dutch chip equipment maker on its “25 stocks for 2026” list, calling it a top semiconductor play for the coming year.

ASML Holding N.V., ASML

The timing couldn’t be more interesting. ASML shares jumped 1.9% to $1,108.78 after JPMorgan raised its price target to $1,275 from $1,175. That follows BofA’s decision to lift its price objective to €1,158 from €986.

Both banks see the same thing. ASML is entering a multi-year upturn driven by increasing demand for its lithography equipment.

The numbers tell the story. BofA expects ASML to ship 55 low-NA EUV tools next year. That jumps to 63 tools in 2027, both figures above earlier assumptions.

Lithography intensity is projected to climb toward 26% by 2028. This comes as DRAM makers add more EUV layers to their manufacturing processes. Samsung’s return to competitiveness and Micron’s faster EUV adoption are helping drive this trend.

The bank expects ASML to report €7.4 billion in fourth-quarter 2025 orders. That beats the consensus estimate of roughly €6 billion. DRAM and foundry customers are leading the charge.

Cash Flow and Margins Set to Expand

Free cash flow projections look strong. BofA forecasts FCF will double to €14 billion as the company works through inventory normalization. ASML plans to return approximately 93% of free cash flow to shareholders by the end of 2027.

The buyback program is massive. ASML has €15.5 billion earmarked for share repurchases in 2026. The company also raised its quarterly dividend to $1.857, translating to an annualized $7.43 per share.

Gross margins are expected to expand by about 150 basis points. This should fuel roughly 30% earnings growth in the near term. BofA projects a 5 percentage-point margin expansion by 2030.

The compound annual earnings growth rate over the next five years sits at 18%. That’s a solid runway for a company of ASML’s size.

China Risk Easing as Customer Base Diversifies

One concern that kept investors cautious is starting to fade. Customer concentration risk is decreasing as ASML’s client base diversifies. Intel appears to be stabilizing while AI chipmakers move to more advanced nodes.

China’s contribution to revenue is expected to normalize in the low-to-mid-20% range. This shifts the narrative from what analysts called a “WFE minus” to a “WFE plus” story.

The company recently beat earnings estimates with $6.41 per share versus the expected $6.27. Revenue came in slightly below expectations at $8.80 billion compared to $8.99 billion consensus.

ASML will stop reporting bookings starting in Q1 2026. Management plans to provide more detail on backlog maturity and end-market dynamics instead.

BofA’s earnings estimates now stand 3% above consensus for 2026 and 9% above for 2027. The firm expects ASML to guide for mid-single-digit revenue growth in 2026 with flat margins and operating expense growth of 6-7%.

Wall Street consensus shows 4 Strong Buy ratings, 16 Buy ratings, and 7 Hold ratings. The average price target sits at $1,093. The stock trades with a market cap of $436 billion and a P/E ratio of 45.13.

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