ASML Stock: Named Top Semiconductor Pick for 2026 by Bank of America

TLDR

• Bank of America names ASML a top semiconductor investment for 2026, raises price target to €1,158
• JPMorgan boosts target to $1,275 as shares climb 1.9% to $1,108.78
• Expected to ship 55 low-NA EUV tools in 2026, rising to 63 in 2027
• Free cash flow forecast to double to €14 billion with 30% earnings growth
• Consensus rating stands at Moderate Buy with average target of $1,093

Two of Wall Street’s powerhouse banks just gave ASML their stamp of approval. The Dutch semiconductor equipment maker landed on Bank of America’s exclusive “25 stocks for 2026” list. JPMorgan followed suit by raising its price target to $1,275.

ASML Holding N.V., ASML

Shares responded immediately. ASML stock jumped 1.9% to close at $1,108.78 after the dual upgrade. The market cap now sits at $436 billion with a P/E ratio of 45.13.

Bank of America sees a clear path forward. The firm lifted its price target to €1,158 from €986 while maintaining a Buy rating. Analysts led by Didier Scemama expect 2027 to mark a turning point for the company.

The catalyst? Rising lithography intensity across the semiconductor industry. DRAM manufacturers are adding more EUV layers to their production processes. This trend is expected to push lithography intensity toward 26% by 2028.

Equipment Shipments Accelerating

ASML’s tool shipments tell an interesting story. BofA projects the company will ship 55 low-NA EUV tools next year. That number climbs to 63 in 2027, both figures higher than previous estimates.

Fourth-quarter orders look strong. Analysts expect ASML to report €7.4 billion in Q4 2025 orders, beating the roughly €6 billion consensus. DRAM and foundry customers are driving the demand.

The company recently beat earnings expectations with $6.41 per share versus the $6.27 estimate. Revenue came in at $8.80 billion, slightly below the $8.99 billion forecast.

Cash Generation and Shareholder Returns

Free cash flow projections paint a compelling picture. BofA forecasts FCF will double to €14 billion as inventory levels normalize. By the end of 2027, ASML expects to return approximately 93% of free cash flow to shareholders.

The buyback program is substantial. ASML allocated €15.5 billion for share repurchases in 2026. The company also increased its quarterly dividend to $1.857, representing an annualized yield of $7.43 per share.

Gross margins are set to expand. BofA anticipates a 150 basis point improvement leading to 30% earnings growth. Over the next five years, the compound annual earnings growth rate is projected at 18%.

Customer Base Diversifying

Customer concentration concerns are easing. Samsung is regaining competitiveness while Micron accelerates EUV adoption. Intel shows signs of stabilization as AI chipmakers advance to newer nodes.

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

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

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

Wall Street maintains a Moderate Buy rating on the stock. The consensus includes 4 Strong Buy ratings, 16 Buy ratings, and 7 Hold ratings with an average price target of $1,093.

The post ASML Stock: Named Top Semiconductor Pick for 2026 by Bank of America appeared first on Blockonomi.