Key Takeaways:
Goldman Sachs raised its price target on ASML Holding N.V. (NASDAQ:ASML) to €1,600, arguing the market is undervaluing the semiconductor equipment giant’s critical role in the artificial intelligence buildout.
“ASML currently trades at a slight discount to global semiconductor capital equipment peers, despite historically trading at a premium of approximately 20%,” Goldman Sachs noted in its report. The bank maintained its “Buy” rating, viewing the current valuation as unjustified given ASML’s near-monopoly in extreme ultraviolet (EUV) lithography and accelerating AI-related growth.
The new €1,600 target, up from €1,570, suggests approximately 22% upside from the stock's recent price of €1,308.20. Goldman’s bullish thesis rests on three core drivers it believes the market is under-pricing: sustained AI demand driving EUV tool sales, manufacturing inefficiencies from global fab diversification requiring more equipment, and continued growth in the number of EUV layers needed for advanced chips.
However, the optimistic target comes as ASML navigates significant headwinds. Shares have already rallied 91% over the past year, and the company faces challenges including a delay in adoption of its next-generation machines by its largest customer, Taiwan Semiconductor Manufacturing Co., and geopolitical risks that could halt sales of older equipment to China.
Goldman Sachs pointed to resilient capital spending from cloud providers as a key indicator of future demand. The bank forecasts global wafer fabrication equipment spending to reach $186 billion in 2027, a significant increase from previous estimates. This spending is driven by an urgent need to build out AI data centers, which rely on advanced chips produced by ASML’s machines.
In the first quarter of 2026, ASML reported a net profit of €2.8 billion on revenues of €8.8 billion. However, the company projected a slight slowdown with second-quarter revenue guided to around €8.7 billion and a gross margin of 51.5%, suggesting cost pressures may be a factor.
Two major risks temper the bullish outlook. First, TSMC announced it would delay the deployment of ASML’s new “High-NA” EUV systems, choosing to rely on existing technology for its next node. This disrupts the timeline for a key next-generation revenue stream for ASML.
Second, increasing trade tensions could lead to a U.S. ban on sales of older deep ultraviolet (DUV) lithography systems to China. Sales to China represented 19% of ASML’s revenue in the first quarter, down from 33% a year prior. Analysts estimate a full ban could erase about 5% of the company’s total revenue.
The updated price target signals confidence from Goldman Sachs that the powerful AI tailwind will ultimately outweigh the risks from customer delays and geopolitics. Investors will be closely watching the company's next earnings report to see if margins can hold up under the competing pressures.
This article is for informational purposes only and does not constitute investment advice.
