UBS has reiterated ASML Holding as its top selection within European technology hardware as companies move toward second-quarter earnings, attributing the call to resilient, AI-driven demand that has stretched the semiconductor cycle beyond earlier expectations.
The brokerage told investors that corporate management teams currently see "limited visibility into any meaningful slowdown" and so are unlikely to make material reductions to second-half guidance without clearer evidence. UBS retains a sector preference that ranks semicap above analogue, and analogue above telecom equipment, placing ASML first, followed by ASM International and STMicroelectronics.
Across those three names UBS said it identifies "meaningful upside" to 2027-28 estimates, and noted its earnings-per-share projections run more than 10% ahead of consensus for both 2027 and 2028.
ASML is due to report second-quarter results on July 15. UBS carries a "buy" rating on the stock with a price target of c2,100.
On company guidance, ASML has set full-year revenue at c36 billion to c40 billion, compared with a consensus view of c39.4 billion. UBS s own revenue estimate aligns with consensus at c39.4 billion, representing a 21% increase and consistent with UBS s projection of 27% year-over-year growth in wafer fab equipment (WFE) spending.
UBS said it sees the potential for ASML to move guidance toward the upper end of that range, or possibly slightly above, pointing to strong demand dynamics and order pull-ins. The analysts also flagged room for a modest upward revision to full-year gross margin toward the high end of ASML s 51-53% guidance band, driven by a richer mix of upgrades.
The broker emphasized that ASML s 2026 guidance assumes China will account for roughly 20% of revenue, which implies roughly a 23% year-over-year decline in China-derived sales - compared with UBS s estimate of about a 12% decline. UBS also noted that "lithography shipments are down ~24% YoY year-to-date," but expects the second half to be stronger, supported by memory resilience, capacity expansions at CXMT and YMTC, and AI-driven demand in advanced logic.
On capacity planning, UBS reported ASML indicated capacity for "80-plus systems" in 2027, versus buy-side expectations nearer 90-100 tools. The broker said it expects management to reiterate ASML s ability to flex capacity to meet demand as required.
Looking at UBS s near-term model versus the market, the bank said it sits about 1% above consensus on ASML second-quarter revenue. UBS projects a second-quarter gross margin of 53% versus a 52% consensus, and an EBIT margin of 36.1% compared with a 34.6% consensus.
For full-year 2026, UBS s revenue estimate is in line with consensus, while gross margin is modeled at 53.7% (consensus 52.4%) and EBIT margin at 38.3% (consensus 36.5%).
UBS has raised its WFE forecasts materially: 2026 is now pegged at $147 billion, up 27% year-over-year from a prior $142 billion forecast. The broker raised its 2027 WFE outlook to $198 billion from $172.5 billion, and its 2028 forecast to $247.5 billion from $182 billion.
UBS said the upward revisions are driven by memory spending, with 2026 memory outlays forecast at $69.5 billion, including about $52 billion in DRAM, which UBS estimates is up 50% year-over-year.
UBS s sector hierarchy and name selections reflect its view that AI-related investment is sustaining elevated capital spending in chip production. The broker s top hardware picks remain ASML, ASM International and STMicroelectronics, and UBS s financial projections for those companies suggest upside to market expectations in 2027 and 2028.
Key upcoming date: ASML s second-quarter results are scheduled for July 15.
This outlook arrives amid ongoing questions about geographic revenue exposure and shipment trends, but UBS s updated WFE and memory forecasts indicate the broker expects stronger industry spending over the next several years.