BofA Names ASML Top Semiconductor Equipment Pick on Growth, Valuation

BofA Global Research has named ASML Holding its top stock pick in the semiconductor capital equipment sector, maintaining a Buy rating as analysts see the Dutch chipmaking equipment giant trading at an unwarranted discount to its peers.

ASML currently trades at 20.3 times estimated CY2027 EV/EBIT, representing a 7.7-turn discount to its historical median of 28.0 times. The company also trades at a 1.6-turn discount to global semiconductor equipment peers, which average 21.9 times EV/CY2027 EBIT. In contrast, major U.S. competitors are valued at premiums of 6.1 to 7.0 times above their historical averages.

BofA maintained its Buy rating on ASML stock and set a €2,452 price objective. The firm expects ASML to deliver a 27% revenue compound annual growth rate, the second-highest among large-cap semiconductor capital equipment companies and above the peer average of 22%.

Earnings growth could be even stronger. ASML is forecast to achieve a 39% EPS CAGR, compared with an average of 33% among competitors. BofA’s forecasts are also above current consensus estimates.

The bank expects ASML to post the sector’s strongest gross margin expansion over the next three years, rising 4.6 percentage points versus approximately 1-2 percentage points for peers. A richer product mix, increased software attachment rates and future equipment price increases are expected to support margins.

BofA also highlighted rising lithography intensity as a bullish catalyst. Lithography is expected to account for roughly 26% of semiconductor manufacturing spending this year, up from 24.6% in CY2025, supported by accelerating extreme ultraviolet (EUV) adoption in DRAM production and higher layer counts.

ASML’s growth outlook is further supported by strong demand. The company’s CFO recently said ASML has room to raise equipment prices, while EUV production capacity is nearly fully booked through the end of 2027.

Meanwhile, Elon Musk is scheduled to appear virtually at an upcoming technology conference to discuss his Terafab project, adding further attention to advanced semiconductor manufacturing and equipment demand.