Why UBS Says ASML Is the Best Stock to Buy Right Now

TLDR

• UBS raised its S&P 500 year-end target to 7,900, up from 7,500, citing strong earnings and AI demand
• The firm lifted its 2026 S&P 500 earnings per share estimate to $335, representing 20% growth
• Semiconductor and memory chip pricing account for about half of the upward earnings revision
• UBS named ASML Holding as its top stock pick in the current high-market environment
• The Strait of Hormuz closure was flagged as the main near-term risk to the rally

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UBS upgraded its outlook on both the broader US stock market and one key semiconductor company this week, pointing to strong earnings growth and rising demand for AI infrastructure as the main drivers.

The bank raised its S&P 500 year-end price target to 7,900, up from 7,500. It also set a new June 2027 target of 8,200. The firm lifted its 2026 earnings per share estimate for the index to $335, up from $310. That represents 20% growth.

About half of that earnings upgrade came from semiconductors, particularly memory chip pricing. Energy sector profits made up around another quarter of the increase. UBS also raised its 2027 earnings estimate to $375, implying 12% growth.

The bank said higher data center investment spending in 2026 drove much of the revision. It kept its positive view on US equities, saying bull market conditions remain in place.

Why UBS Is Watching ASML

Within the semiconductor space, UBS singled out ASML Holding as the most attractive stock to buy right now. The Dutch company makes the advanced lithography machines used to produce cutting-edge chips. It holds a near-monopoly on this equipment.

ASML Holding N.V., ASML

ASML’s customers include major chipmakers like TSMC, Samsung, and Intel. Its tools are also critical to memory chip producers. The company sits at the center of AI chip manufacturing, as producers like Nvidia depend on its machines.

UBS raised its price target on ASML to €1,900 and kept a Buy rating on the stock. The analysts cited three reasons for the call: capacity remains above demand, memory lithography market share keeps growing, and the high NA technology story still has room to run.

Growth Forecasts and Capacity

UBS now expects ASML’s EUV revenues to grow 37% year-over-year in 2027, up sharply from its previous estimate of 26%. For 2028, it now sees 10% growth, compared to an earlier forecast of -1%.

For foundry and logic, which makes up 62% of ASML’s product sales, UBS forecasts 34% growth in 2027 and 18% in 2028. These are well above prior estimates.

The analysts noted that ASML has communicated capacity of over 80 EUV units in 2027, but their own analysis suggests the true maximum could exceed 100 units.

UBS also pointed to High NA technology as a long-term growth driver. The firm estimates it can deliver cost savings of 20–40% on critical layers, as well as throughput gains of over 100% compared to most alternatives.

Risks UBS Named

Despite the positive outlook, UBS flagged the Strait of Hormuz closure as the top near-term risk. The firm said a resumption of energy flows through the strait is likely needed before the rally can extend further.

Rising long-term interest rates or a return to Fed rate hikes were listed as additional risks, though UBS said these are not part of its base case.