ASML Shares Gain Favor as Major Bank Raises Price Target

The spotlight in the technology sector remains firmly on ASML Holding NV. The Dutch semiconductor equipment manufacturer has seen its shares surge more than 60% since the start of the year, trading solidly in four-digit territory. Despite what many consider a rich valuation, market experts continue to lift their targets, and institutional investors are significantly increasing their stakes.

The primary catalyst for ASML's strength is the relentless demand driven by artificial intelligence. The company holds a global monopoly as the sole producer of Extreme Ultraviolet (EUV) lithography systems, which are essential for manufacturing the most advanced AI chips. Its next-generation High-NA EUV machines carry a price tag of approximately $400 million each.

This unique technological position translates into formidable financial results. ASML boasts a net margin of 29.38% and has reported a trailing twelve-month net profit of $11.08 billion, ranking it among the most profitable firms in the semiconductor industry.

Bank of America Sees Further Upside

In a notable move, Bank of America has increased its price objective for ASML to $1,331, reiterating its Buy rating. The bank's analysts argue that the company's monopolistic role in supplying cutting-edge chipmaking tools is irreplaceable. Currently, the stock trades near $1,100, close to its 52-week high of $1,142.

This bullish sentiment is broadly echoed across the analyst community:
* A strong majority, 71% of covering analysts, recommend purchasing the shares.
* The consensus average price target stands at $1,172.
* On a scale from 1 (Strong Buy) to 5 (Strong Sell), the broker consensus recommendation is 1.42.

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

Institutional Investors Ramp Up Holdings

Major asset managers substantially boosted their positions in ASML during the second quarter. 1832 Asset Management grew its holding by 67.6% to 5,706 shares. Even more aggressive buying was seen from Princeton Global Asset Management, which increased its stake by 153.8%, and Washington Trust Advisors, which raised its position by 129.4%. In total, 82 hedge funds now report holdings in the company.

This institutional accumulation follows robust fundamental performance. For the third quarter, ASML reported earnings per share of $6.41, surpassing analyst estimates of $6.27. Quarterly revenue reached $8.80 billion.

Valuation Premium Reflects Exceptional Status

Trading at a price-to-earnings ratio of 41.54, ASML's shares are priced for significant future growth. For context, key customer TSMC trades at a P/E ratio around 23.5. While some market observers favor TSMC for 2026 due to its more attractive valuation, ASML continues to benefit from its perceived technological insurmountability.

Market chatter also includes speculation about a potential stock split. With the last split occurring 18 years ago, the stock's sustained move above the $1,000 level may prompt management to consider making shares more accessible to retail investors.

As the foundational infrastructure investment for the AI era, ASML commands a premium valuation that mirrors its exceptional market position. The rising price targets from major financial institutions signal that many investors believe further potential remains, contingent on the company's ability to meet the enormous demand for its next-generation High-NA EUV systems.