ASML shares #ASML rose earlier this week after Barclays upgraded the stock to overweight, citing strong orders, an acceleration in demand driven by artificial intelligence, and upward scenarios that it believes are still not fully priced in.
Analyst Simon Koles said: "Expectations were high before the results, but hope was realized in record orders driving significant upgrades to estimates."
Barclays raised its price target to 1,500 euros from 1,200 euros, arguing that there is still "room for further upside" as ASML's guidance appears conservative despite strengthening fundamentals.
The company reported receiving record orders of 13.2 billion euros, nearly double last year's level and well above expectations. It also raised its revenue forecast for 2026 to 34 billion euros - 39 billion euros, which exceeds consensus expectations and is stronger than its previous outlook for largely stable growth compared to 2025.
Alongside an optimistic demand picture, ASML announced plans to cut about 1,700 jobs as part of a broader restructuring aimed at streamlining management while expanding engineering capacity.
Barclays stated that demand for lithography related to building large-scale data centers remains a key driver, while further upside could come from consumer adoption of artificial intelligence, human robotics, and a more resilient memory spending cycle.
Competition in the foundry has been particularly supportive, with Coles noting "the upward risks from this competition driving increased investment which should benefit ASML/semicap through 2027."
At the same time, concerns about China were also considered exaggerated. "This seems unnecessary for 2026 as ASML wisely sets guidance indicating a decline in China of more than 10% year-over-year to start, but recent import strength suggests that demand remains strong," wrote Coles.
The analyst now expects low double-digit revenue growth in 2026 and 2027, leading to mid- to high double-digit earnings upgrades, with further upside possible if AI investment and foundry spending accelerate faster than expected.
