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ASML Set for Multi-Year Growth Spurt
3 Dec
Summary
- Bank of America names ASML a top semiconductor pick for 2026.
- Company anticipates multi-year upturn driven by lithography intensity.
- Free cash flow is projected to double, with significant shareholder returns.
ASML is positioned for a significant multi-year upturn, according to Bank of America, which has named the company a top semiconductor pick for 2026. Analysts anticipate accelerating earnings driven by rising lithography intensity, particularly as DRAM manufacturers integrate more EUV layers. This strategic shift is expected to lead to substantial gross margin expansion and robust earnings growth.
The bank's positive outlook is further bolstered by projections of free cash flow doubling to €14 billion by 2027. This enhanced financial performance is anticipated to fund a significant €15.5 billion share buyback in 2026 and substantial dividend payouts. ASML is expected to return nearly all its free cash flow to shareholders by the end of 2027.
Concerns regarding customer concentration are easing as key clients like Samsung and Micron enhance their adoption of EUV technology. Furthermore, ASML's increased share in customer spending, coupled with a stronger product mix, is expected to normalize its contribution from China. This evolving landscape suggests a transition from a "WFE minus" to a "WFE plus" narrative for ASML.
