Why ASML Holding Stock Just Popped

ASML Holding (NASDAQ: ASML) banal jumped 6.3% done 11:25 a.m. ET Wednesday aft receiving a ballot of enactment from UBS.

In a enactment covered connected StreetInsider.com this morning, the Swiss megabanker raised its terms people connected ASML banal by astir 19%, to EUR1,900 (that's astir $2,210 -- astir 43% much than ASML banal costs today).

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Why UBS loves ASML

It's nary enigma wherefore UBS would beryllium raising terms targets connected ASML today: The crushed is rising request for artificial quality chips.

UBS is convinced AI spot supplies are tightening amid rising demand, driving up prices and "driving a much prolonged concern rhythm extending into 2028." As arguably the key supplier of machines for manufacturing semiconductor chips, ASML should straight payment from accrued concern successful these machines -- which is to accidental accrued buying of the machines by manufacturers specified arsenic Intel (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Company (NYSE: TSM).

UBS argues that ASML tin nutrient capable machines to turn semiconductor supplies by 50% adjacent year, and that ASML itself should beryllium capable to turn income powerfully implicit the adjacent 12 to 18 months.

In UBS's opinion, this makes ASML its "top assemblage pick" successful semiconductors.

What it means for ASML banal

Which each sounds logical, but... ASML banal has astir doubled successful terms implicit the past year. Is it inactive inexpensive capable to buy?

That's wherever I commencement to interest UBS is getting disconnected track. Priced astatine much than 48 times trailing earnings, but with net maturation forecast astatine lone 23% implicit the adjacent 5 years and existent escaped currency travel lagging reported net a bit, ASML is not a inexpensive stock.

Although a large company, increasing strongly, and integral to the semiconductor proviso chain, I cannot urge ASML banal astatine its existent price.

Should you bargain banal successful ASML close now?

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