JPMorgan has issued a research report reaffirming its "Buy" rating on ASML Holding NV (ASML.US) and maintaining it as a preferred pick with a target price of 822 euros. The investment bank believes the company's worst period may be behind it, with both logic and memory markets expected to show improvement.
Following ASML's disappointing second-quarter results in July, where the company stated "we are still preparing for growth in 2026, but cannot confirm this plan at this stage," the semiconductor equipment maker has seen improved news flow in August and September. JPMorgan views this as evidence that the worst news appears to be over.
While 2026 may not represent a robust growth year for ASML, the company is likely to provide better medium-term guidance, which should support strong sales growth in both logic and storage markets by 2027.
Key indicators that have shifted since summer include several positive developments. Company management has indicated they've seen gradually improving news during the summer period without any new negative developments. First, uncertainty regarding U.S.-related orders has dissipated as no tariffs were imposed on semiconductor equipment exports to the United States, and ASML should begin receiving planned orders for U.S. capacity expansion.
Second, strong data points from NVIDIA (NVDA.US), Broadcom (AVGO.US), and hyperscale companies show no signs of artificial intelligence spending deceleration. Taiwan Semiconductor's AI-driven revenue growth indicates their 2026 capital expenditure should remain robust.
Additionally, demand related to HBM chips remains strong, with memory chip prices showing no signs of weakness. There are indications that Samsung may soon receive NVIDIA HBM4 certification, which would have a very positive impact on equipment shipments from late 2026 through 2027.
JPMorgan believes the risk of weak 2026 guidance from ASML has diminished significantly, while 2027 trends are expected to be strong. For the stock, the critical factor will be ASML's 2026 revenue guidance announcement on October 15th, after which only 2027 projections will matter. Although ASML won't provide specific guidance, the market is expected to infer positive trends, which should benefit the stock.
Furthermore, ASML's stock price remains below its previous average price-to-earnings ratio of 30-35 times, making it appear attractive from a valuation perspective.