ASML’s AI Tailwind Meets TSMC Delay and China Risk as Goldman Sachs Lifts Target

Goldman Sachs ups ASML price target to €1,600 (Buy), citing attractive valuation. However, delayed High-NA EUV rollout and potential US DUV ban on China cloud AI-driven growth.

Goldman Sachs sees enough value in ASML to nudge its price target higher, but the Dutch lithography giant is navigating a landscape where two significant structural headwinds — a delayed roll-out of its most advanced machines and a tightening noose around sales to China — are testing the AI-driven narrative.

The bank on Wednesday raised its target to €1,600 from €1,570, sticking with a “Buy” rating. The call hinges on what Goldman describes as an unusually attractive relative valuation: ASML’s forward price-to-earnings multiple for the next two years sits at a slight discount to the semiconductor equipment peer group, whereas historically it commanded a premium of around 20%. The shift in product mix toward extreme ultraviolet (EUV) systems, where ASML holds a de-facto monopoly, underpins the bullish thesis, particularly as leading-edge memory demand accelerates.

Yet the market’s reaction remains measured. ASML shares were trading at €1,308.20 on Wednesday, up 1.19%, but still well short of the recent high. The stock has rallied 32.37% since the start of the year and 91.54% over twelve months, a run that has some analysts questioning whether the earnings momentum can keep pace. One cut to “Hold” earlier this week flagged uncertainty around revenue and profit growth, and margin trends are being scrutinised anew.

Those earnings figures are solid enough. First-quarter net profit came in at €2.8 billion, or €7.15 per share, on revenue of €8.8 billion — both above consensus. The outlook for the second quarter, however, gave the market pause: ASML guided for revenue of roughly €8.7 billion and a gross margin of 51.5%. For the full year, management lifted the revenue range to €36–40 billion but kept the gross margin target steady at 51–53%, a mixed signal that suggests cost pressures and product mix are eating into profitability.

Two overhangs are sharpening that concern. First, TSMC, ASML’s largest customer, has pushed back the introduction of the next-generation High-NA EUV machines to at least 2029, with a price tag of more than €350 million each. The Taiwanese chipmaker plans to rely on existing EUV technology for the foreseeable future, derailing ASML’s original schedule for a broad roll-out in 2027–2028. Analysts at Bernstein downplay the impact, arguing that High-NA was always intended for chip nodes around 2030, and the slower adoption is neutral to slightly positive for ASML’s current product cycle.

Second, the geopolitical cloud over China has darkened. The US is debating the MATCH Act, which would prohibit exports of older DUV lithography systems to China — a market that has been a significant revenue contributor. ASML’s China sales fell to 19% of total revenue in the first quarter of 2026, down from roughly 33% a year earlier. A blanket DUV ban could wipe out about 5% of group revenue, according to market estimates. The company has partially offset the drag by raising its full-year forecast, but the risk remains that further restrictions will squeeze the top line.

ASML continues to return capital to shareholders through its ongoing share buyback program. Between May 4 and May 8, it repurchased its own stock for around €79.4 million. While that provides a floor, it does not resolve the core valuation debate. The second quarter will be pivotal: if ASML can hit its own revenue guidance and stabilise gross margins, Goldman’s re-rating thesis gains traction. Should margins slip further, a higher price target alone may not be enough to sustain the rally.