ASML Emerges as a Leading Investment Pick for 2026

While ASML shares have paused following a remarkable run of gains, a strategic tug-of-war is unfolding behind the scenes as major investors reposition their portfolios. Divergent moves by institutional players highlight a market at a crossroads, even as prominent analysts project significant future growth. In a notable endorsement, Bank of America has recently named the Dutch semiconductor equipment manufacturer its top pick for 2026.

The analyst community remains bullish, seemingly undeterred by recent portfolio shifts. Didier Scemama of Bank of America has designated ASML as his preferred semiconductor investment heading into 2026. The firm has substantially increased its price target from $1,134 to $1,331, suggesting an approximate 20% upside from current levels.

This optimistic outlook is anchored on four key catalysts:
1. DRAM Market Share: ASML's share in the DRAM segment is projected to climb to 26% by 2028.
2. Margin Expansion: A 500-basis-point expansion in gross margin is anticipated by 2030.
3. Customer Diversification: Expectations include a recovery in demand from Samsung and Intel, alongside increased adoption of extreme ultraviolet (EUV) technology by Micron.
4. China Business: Revenue contributions from China are forecast to normalize within the low-to-mid 20 percent range.

Institutional Investors Show Divided Sentiment

Recent SEC filings reveal a clear split in sentiment among heavyweight investors. On one side, several institutions have been taking profits. Invesco trimmed its stake by 4.2% in the second quarter, while HSBC Holdings made a more dramatic reduction, slashing its position by nearly 59%.

Should investors sell immediately? Or is it worth buying ASML?

Conversely, other major firms have been aggressively accumulating shares:
* Amundi nearly doubled its holding, marking a 91.6% increase.
* Goldman Sachs boosted its position by 26.5%.
* Fisher Asset Management raised its stake by 6.3%, bringing the total value of its holding to $3.4 billion.

These opposing flows suggest that some market participants are locking in gains after the stock's powerful advance—it is up over 40% year-to-date and currently trades around €962.00—while others are positioning for the rally to continue.

Solid Fundamentals Underpin the Long-Term View

The long-term investment thesis is supported by ASML's underlying profitability and strategic position. The company's latest quarterly results presented a mixed picture, with earnings per share surpassing expectations while revenue slightly missed forecasts. Nevertheless, management demonstrated confidence in its cash generation by implementing a modest increase in the quarterly dividend.

The analyst consensus, maintaining a "Moderate Buy" rating, stays broadly positive. Given ASML's virtual monopoly in EUV lithography systems and its indispensable role in producing advanced AI chips, the company's strategic importance to the global semiconductor industry is expected to remain the dominant driver of its share price through 2026 and beyond.