Source: davit kirakosyan
ASML Shares Surge Following Aletheia Capital Upgrade
Shares of ASML (NASDAQ: ASML), the leading supplier of semiconductor manufacturing equipment, witnessed a significant surge on Friday, with an intraday rise exceeding 8%. This impressive leap was primarily triggered by Aletheia Capital’s double upgrade of the stock from Sell to Buy, coupled with a sharp increase in its price target.
Aletheia Capital Provides Bullish Outlook
In a noteworthy move, Aletheia Capital adjusted its price target for ASML to €1,250, which translates to $1,500 per ADR, up from its previous estimate of €640 or $750. This new valuation is based on a 30x fiscal 2027 earnings multiple, suggesting an optimistic long-term outlook for the company.
The upgrade is a reflection of Aletheia Capital’s significantly higher fiscal year 2026 and 2027 earnings estimates for ASML. The updated projections consider the anticipated wave of investment expansions and semiconductor capacity upgrades. The semiconductor industry is currently experiencing unprecedented demand, fuelled by an accelerated digital transformation across various sectors, from consumer electronics to automotive and healthcare.
Upside Catalysts for ASML
Aletheia Capital elaborates on various upside catalysts that could drive ASML’s performance, including stronger-than-expected demand for extreme ultraviolet (EUV) lithography tools from DRAM manufacturers. This demand is driven by the need for more complex and smaller chip designs to accommodate advancing technologies, such as 5G, AI, and IoT.
The firm also anticipated resilient demand for deep ultraviolet (DUV) systems from China in fiscal 2026. This is particularly significant given the current geopolitical tensions and the nation’s concerted push towards self-sufficiency in semiconductor production.
Surge in Demand from TSMC
A potential surge in demand from Taiwan Semiconductor Manufacturing Company (TSMC) is another significant factor that could contribute to ASML’s growth. Aletheia estimated that TSMC, one of ASML’s largest customers, could install 40 to 45 EUV tools as it expands advanced capacity by 40% to 50% in 2027.
This could potentially lift total EUV shipments to 75 to 80 units, which is near ASML’s maximum capacity. Consequently, the firm predicts that low-NA EUV revenue would rise by approximately one-third in fiscal 2026 and accelerate by 50% to 60% in fiscal 2027, supported by higher volumes and a richer product mix.
ASML’s Sales Growth Projection
Overall, Aletheia projects ASML’s sales growth to reach the mid-teens in fiscal 2026 and accelerate to the mid-twenties in fiscal 2027. These projections are well above both company guidance and consensus expectations.
This bullish outlook for ASML underscores the vital role the company plays in the semiconductor industry. As the sole supplier of EUV lithography systems, ASML is uniquely positioned to benefit from the robust demand for semiconductors and the ongoing shift towards more complex chip designs.
In conclusion, the significant upgrade from Aletheia Capital not only underlines ASML’s strong growth potential but also reflects the broader optimism surrounding the semiconductor industry. As digital transformation continues to accelerate across industries, the demand for advanced semiconductors – and the sophisticated tools required to manufacture them – is set to rise, suggesting a promising future for ASML.