Share prices of ASML (ASML -1.10%) have surged to new highs this year, as the growth outlook for the semiconductor industry improves. JPMorgan analyst Sandeep Deshpande maintained an overweight (buy) rating on the stock with a $1,200 price target. That suggests a nearly 23% price gain over the next 12 months from the current share price of $979.
Several chip companies have recently reported improving growth with solid near-term forward guidance. The recovery underway across the industry could cascade to ASML.
Why analysts are bullish on ASML stock
Almost every analyst that covers ASML rates the stock a buy, and for good reason. The company has delivered solid revenue growth despite an industry that is still recovering from macroeconomic headwinds.
The improving demand for ASML's lithography and testing systems for chip manufacturers is likely to lead to strong orders in the fiscal first quarter, according to Deshpande.
Specifically, the analyst believes that leading chip foundry Taiwan Semiconductor Manufacturing, which uses ASML's machines, is pulling forward its 2-nanometer chip process, which could benefit ASML's business.
Is ASML stock a buy, sell, or hold?
ASML is a solid stock to ride the long-term growth in the chip industry. Analysts expect the company's earnings per share to reach $36.31 in 2026. Assuming the stock is still trading at its previous five-year average price-to-earnings ratio of 42, the stock could be worth over $1,500 in two years.
The stock price may pull back after such a rapid climb to start the year, but growing demand for semiconductors and ASML's testing systems are strong growth catalysts to push the stock higher in the coming years.
