A Dramatic Reversal: Analysts Pivot Bullish on ASML’s Prospects

Shares of semiconductor equipment giant ASML Holding NV surged nearly 9% on Friday, closing at $1,164.50. This significant move was fueled by a striking and rare reversal in analyst sentiment, placing the company's premium valuation under a new spotlight.

The primary driver was a decisive shift from research firm Aletheia Capital. In an unexpected move, the firm upgraded its rating on ASML directly from "Sell" to "Buy." More notably, it simultaneously doubled its price target to $1,500. This action has prompted market participants to reassess whether the company's growth trajectory justifies its high valuation multiples.

Underpinning the Bullish Thesis: TSMC Expansion and EUV Demand

Analyst Warren Lau of Aletheia Capital based this radical reassessment on specific projections. He anticipates that Taiwan Semiconductor Manufacturing Company (TSMC) will expand its production capacity by 40% to 50% by 2027. For ASML, this translates into substantial demand: the analyst forecasts that 40 to 45 of ASML's extreme ultraviolet (EUV) lithography systems could be shipped to the Taiwanese chipmaker in 2027 alone.

The broader forecast suggests ASML's revenue growth will reach double-digit percentages by 2026, accelerating to approximately 25% in 2027. This outlook is rooted in the insatiable demand for the most advanced chips required for artificial intelligence applications. ASML holds a virtual monopoly on the EUV machines essential for manufacturing these components.

Other financial institutions followed with their own adjustments. Citi raised its price target to €1,200, Cantor Fitzgerald lifted its target to €1,300, and Bank of America set a new target of $1,331. Trading volume for ASML shares on Friday reached 160% of the average, reflecting intense investor interest.

Should investors sell immediately? Or is it worth buying ASML?

Sector-Wide Tailwinds: AI and Memory Chip Rally

ASML's advance is part of a broader upswing across the semiconductor sector. On the same day, Micron Technology's stock jumped over 10% after analysts at Bernstein highlighted exploding demand for High Bandwidth Memory (HBM).

This environment is favorable for ASML. The company's EUV systems are critical for producing both the most advanced logic chips, such as AI processors, and next-generation memory chips. Aletheia Capital projects EUV-related growth of 60% to 70% by 2027. Currently, robust orders for DRAM production tied to AI applications are providing strong momentum—a bridge until the anticipated wave of demand from TSMC materializes later this decade.

Navigating Geopolitical Shifts

A critical factor in ASML's recent performance has been its exposure to the Chinese market, which contributed up to 42% of revenue in 2024 and 2025. Analysts project a notable decline in this contribution for 2026, citing export restrictions and market saturation. However, the bullish argument posits that rising demand from Taiwan and the booming memory chip sector will more than compensate for this expected shortfall.

Following Friday's rally, ASML shares trade at a forward price-to-earnings ratio in the range of 38 to 40—a premium valuation that inherently prices in significant future growth. The company is scheduled to release its next quarterly results on January 28. This report will be scrutinized for evidence that the current order book supports the aggressive growth forecasts for 2027.