BofA Sees Limited China Risk for ASML Holding N.V. (ASML), Maintains Top Pick Rating

ASML Holding N.V. (NASDAQ:ASML) is one of the AI Stocks in Focus on Wall Street. On January 27, BofA Securities analyst Didier Scemama reiterated a Buy rating on the stock with a $1,672.00 price target. The firm maintains its “Top Pick” stance on ASML, seeing limited China threat and highlighting inflection in edge AI.

Bofa highlighted that it hosted Erik Hosler, former Chief Technology Officer and Founder at xLight Inc. The discussions between them have led the firm to believe that China is a limited competitive risk to ASML’s business.

“We reiterate our Buy/Top Pick for ASML at PO €1,454/$1,672 on 31.0x CY27E EV/EBITDA.”

BofA noted how China’s domestic EUV push is advancing, but it remains a limited competitive threat to ASML since its capabilities still remain several years behind. Structural disadvantages such as China’s lack of global integration and deep customer collaboration, continue to constrain its ability to compete at the cutting edge. This is something which underpins ASML’s tech leadership.

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This is also the reason why leading fabs such as TSMC and Intel are unlikely to adopt Chinese EUV tools while domestic players such as SMIC and CXMT are likely to continue purchasing ASML immersion and local EUV systems in parallel.

“China may gain some traction in emerging markets through discounted pricing.”

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Disclosure: None.