Bank of America (BofA) has recently revised down the share price target for ASML, the world’s leading chip lithography equipment maker, citing decreased demand for the company’s latest high NA extreme ultraviolet (EUV) lithography machines. ASML’s pivotal role in the semiconductor industry has long been tied to its advanced EUV technology, which allows manufacturers to print the complex designs of microchips.
However, BofA’s recent downgrade highlights shifts in the industry that may affect the importance of ASML’s latest technology.
BofA lowered its price target for ASML from €795 to €759, adjusting its earnings per share (EPS) projections for 2026 and 2027 accordingly. The revised estimate follows remarks from Intel’s leadership, who suggested that lithography may not be as critical in the production of next-gen chips as it was for smaller nodes like 7nm. Instead, chipmakers are increasingly focusing on 3D designs that build vertically rather than horizontally, which reduces the reliance on high-precision EUV machines.
The decision also comes amid a broader market uncertainty, production challenges at Intel, and SK hynix’s focus on 3D memory chips, which rely on different fabrication technologies. Furthermore, the looming possibility of tighter restrictions on chip manufacturing equipment for China is creating additional uncertainty. Despite this, BofA remains optimistic about ASML’s long-term prospects, especially in the context of AI chip manufacturing, which is expected to boost demand for lithography tools.
While BofA’s downgrade is a reflection of short-term challenges, it retains a “Buy” rating for ASML, reflecting confidence in its position in the semiconductor ecosystem and the anticipated growth of the AI chip market, which could see demand for ASML’s machines surge as AI chips are often produced with the latest technology. The bank forecasts AI chip demand could hit $795 billion by 2030, further supporting ASML’s role in shaping the future of chipmaking.