By Nate Wolf
Demand for chips isn't likely to subside any time soon, and the Dutch semiconductor equipment company ASML Holding is poised to benefit, said analysts at Bernstein.
The firm upgraded ASML to Outperform from Market Perform and boosted its price target on the stock to $1,528 from $935 in a research note Sunday. ASML is the firm's top pick in European semiconductors for 2026.
U.S.-listed shares of ASML were up 3% to $1,198.74 in premarket trading Monday. After a slow start to last year, the stock has climbed 51% over the last 12 months.
ASML makes equipment for dynamic random-access memory chips, or DRAM, produced by names like Micron Technology. It also supports the production of logic chips, such as graphics processing units, giving the company exposure to multiple sides of the artificial-intelligence boom.
"While many believe ASML's growth will be primarily driven by logic, we think the upside from DRAM is significantly underestimated," wrote Bernstein analysts led by David Dai.
The top three DRAM makers -- Micron, Samsung Electronics, and SK Hynix -- are boosting capital expenditures in 2026 and 2027 to meet demand from AI servers, the analysts said. The trio also are migrating to new technology that requires greater spending on lithography, which is an ASML specialty.
On the logic chip side, meanwhile, "unprecedented AI demand" is also prompting expansion by leading chip makers, Bernstein argued. Taiwan Semiconductor Manufacturing and Samsung are two names in particular that are ramping up capacity.
Growing demand may even support ASML's business in China, where the company has said it expects revenue to decline in 2026. Bernstein thinks that forecast is accurate, but it expects the drop in revenue to largely halt after 2027 as China's advanced logic chip capacity explodes.
Bernstein estimates ASML will grow revenue overall by 6% in 2026 and roughly 10% to 12% over the final four years of the decade. The firm also sees margins expanding to 57.7% in 2030 from 52.8% last year.
Write to Nate Wolf at nate.wolf@barrons.com
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January 05, 2026 08:33 ET (13:33 GMT)
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