J.P. Morgan said ASML NV’s (AS:ASML) worst quarter appears to be behind it and reiterated its top pick status, citing improving order trends, strong demand across logic and memory segments, and a clearer path for 2027 growth.
Shares of the semiconductor chips maker was up 3% at 06:18 ET (10:18 GMT).
After a disappointing second-quarter report in which ASML said, “we still prepare for growth in 2026, we cannot confirm it at this stage,” the newsflow for the company has improved through August and September, according to the brokerage.
Several developments have reduced uncertainty over the summer. With no tariffs on semiconductor equipment shipments into the U.S., “the uncertainty on US-related orders is likely behind the company,” J.P. Morgan analysts said.
ASML is expected to begin receiving orders for its planned U.S. capacity, while AI-related spending from Nvidia, Broadcom and hyperscale customers remains strong. TSMC, ASML’s largest customer, reported 37% year-over-year revenue growth through August 2025, and analysts expect the trend to continue through the rest of the year.
TSMC’s ramp-up of its 2-nanometer process and expected adoption of the A16 process by Nvidia is likely to increase EUV exposure requirements, driving stronger orders for ASML in 2026 and particularly in 2027.
The memory market also shows promise, driven by high-bandwidth memory demand.
DRAM pricing has remained strong, supported by ongoing AI-related demand, and J.P. Morgan flagged that the tight supply-demand environment is expected to continue until new greenfield capacity begins in 2027.
Samsung’s potential qualification of HBM4 with Nvidia could act as a catalyst, prompting ASML orders that would impact shipments by the end of 2026 and carry into 2027.
“Samsung qualification would be a major catalyst for ASML and semi-cap in general because it would trigger stronger Samsung capex,” the brokerage said.
Despite ongoing caution around 2026 growth, the mid-term outlook is improving. Analysts noted that once ASML provides its 2026 revenue guidance on October 15, the market will focus on 2027 trends.
ASML shares continue to trade below their prior average multiple of 30-35 times earnings, making the stock appear attractive.
ASML is the sole supplier of extreme ultraviolet lithography tools, with its lithography market share expected to exceed 80-89%, driven by higher EUV average selling prices.
The shift to High-NA EUV, starting in 2026, is expected to increase lithography intensity and support greater EUV adoption in DRAM manufacturing.
J.P. Morgan’s December 2026 price target for ASML is €822, based on a 32-times 2027 earnings estimate with a 9% discount rate amid uncertain macro conditions.
The brokerage cited key risks including export restrictions to China, a broader economic downturn, slower-than-expected EUV adoption, and rising interest rates, any of which could pressure the stock’s performance.
J.P. Morgan added that “though ’26 may not be a strong growth year for the company, ASML is likely to indicate better mid-term indications which will help ’27 sales grow strongly in both the logic and memory markets.”
Source :
https://www.investing.com/news/stock-market-news/asml-stock-poised-for-2027-upside-jp-morgan-says-worst-likely-behind-4240134
