Morgan Stanley: ASML's "darkest hour" has passed, reiterates "buy" rating

According to the Zhitong Finance APP, JP Morgan has released a research report, reiterating its "Buy" rating for ASML (ASML.US) and naming it as a preferred stock, with a target price of €822. JP Morgan stated that the company's worst situation may have passed; on the news front, both the logic and memory markets are expected to improve. After releasing a disappointing second-quarter report in July, ASML stated, "We are still preparing for growth in 2026, but we cannot confirm this plan at this stage." Subsequently, ASML's news improved in August and September. Therefore, in JP Morgan's view, the worst news seems to have passed. Although 2026 may not be a strong growth year for the company, ASML is likely to provide better medium-term expectations, which will help achieve strong growth in sales in the logic and storage markets in 2027. Key indicators that have changed since summer include: the company's statements during meetings indicate that they have seen gradually improving news over the summer, with no new bad news. First, due to the lack of tariffs on semiconductor equipment exports to the U.S., the uncertainty regarding U.S.-related orders has passed, and they should start receiving orders for planned U.S. production capacity; second, data points from Nvidia (NVDA.US), Broadcom (AVGO.US), and hyperscale companies have shown strong performance, with no signs of a slowdown in AI spending. TSMC's sales have benefited from AI, which means their capital expenditures in 2026 should also be strong. Finally, demand related to HBM chips remains strong, and prices for memory chips have not shown signs of weakness. There are indications that Samsung may soon receive certification for Nvidia's HBM4, which will have a very positive impact on equipment shipments from late 2026 to 2027. Therefore, in JP Morgan's view, the risk of ASML's weak performance guidance for 2026 has become increasingly small, and the trend for 2027 will be strong. For this stock, it is important that once ASML announces its 2026 revenue guidance on October 15, only the 2027 data will matter. Although ASML will not provide specific guidance, the market is expected to speculate a positive trend, which should help the stock; in addition, ASML's stock price is still below the previous average price-to-earnings ratio level of 30-35 times, so it still appears attractive