ASML (NASDAQ:ASML) led chip stocks higher following its third quarter results, which largely saw positive views from Wall Street analysts.
BofA raised the price target on ASML’s stock to $1,134 (€986) from $1,082 (€941) while maintaining its Buy rating on the shares.
Analysts led by Didier Scemama said the third quarter results addressed several concerns:
Concentrated customer base: The analysts noted that although Taiwan Semiconductor Manufacturing (TSM) and SK hynix continue to be the primary beneficiaries of AI infrastructure capital expenditure, or capex, they see Samsung’s heavy contribution to extreme ultraviolet lithography, or EUV, bookings this quarter as indicative of market share gains in High Bandwidth Memory, or HBM, and DDR5 and renewed customer traction in Foundry.
China exposure: Scemama and his team said they estimate China equipment revenues will be close to 30% of sales in 2025, normalizing to 25% in 2026, implying a 14% revenue decline. This sets the bar at a level that can be beaten, although visibility remains low.
Litho intensity: The analysts noted that litho intensity will grow 80 basis points this year to 24.5% due to an easy compare with TSM sales in 2024, greater-than-expected EUV adoption in DRAM, offsetting weak China and Intel demand.
“With a greater mix of customers participating the AI CAPEX cycle, we think ASML is making progress towards the mid-point of its 2030 revenue guide of €44-60bn of sales. At the midpoint we estimate this translate into c€55 EPS, leaving plenty of upside,” said Scemama and his team.
Jefferies kept its Hold rating on ASML’s stock with a €780 price target.
Analysts led by Janardan Menon said ASML’s third quarter sales were slightly below their forecast, with gross margin, or GM, slightly ahead. The fourth quarter guidance puts it on course to meet 2025 guidance of €32.5B sales at a 52% GM. Orders of €5.4B are slightly ahead of Jefferies consensus of €5.3B, with an improved contribution from EUV (€3.6B) and memory (€2.5B), the analysts added.
“ASML has stated that it does not expect 2026 total sales to be below 2025. However, there does not seem to be confidence in growth either, as otherwise management would have said so. We are forecasting a 2% decline and consensus is forecasting a 3.5% increase,” said Menon and his team.
The analysts noted that ASML expects its China sales to decline significantly in 2026 versus 2025, implying that other areas will grow.
“These are results and outlook commentary which do not give too much ammunition to either bulls or bears in our view. But after such a strong rally and with valuations at 35x 2026, we believe these order trends and the lack of confidence in growth in 2026 are insufficient to drive up the stock much further,” said the analysts.
Evercore kept its Outperform rating on ASML with a €755 price target.
“ASML shares are trading +4% in Europe this morning on strong orders (+650bps above consensus) and Mgmt. commentary highlighting 2026 as growth year. €5.4bn orders (incl €3.6bn EUV) were above expectations for €5bn,” said analysts led by Mark Lipacis.
Shares of ASML rose about 3% on Wednesday, while other chip equipment makers also saw gains. KLA (KLAC) jumped around 6%, Lam Research (LRCX) climbed about 4% and Applied Materials (AMAT) rose nearly 3%.
AI chipmakers, Nvidia’s (NVDA) stock rose about 1%, while Advanced Micro Devices (AMD) surged around 9%. Earlier today, HSBC upgraded Nvidia’s (NVDA) stock rating to Buy from Hold and its price target to $320 from $200. The firm also raised the price target on AMD’s stock to $310 from $185.
Broadcom (AVGO) jumped about 3%, while Qualcomm (QCOM) was largely flat but in the green.
Shares of Taiwan Semiconductor Manufacturing (TSM) and Intel (INTC) each rose about 3%, while Lattice Semiconductor (LSCC) and Marvell Technology (MRVL) climbed nearly 2% each. Analog Devices (ADI), GlobalFoundries (GFS) and Texas Instruments (TXN) each rose around 1%.