Investing.com -- Morgan Stanley lowered its price target on ASML Holding (AS:ASML) to €640 from €680 in a note to clients on Thursday, citing “weaker-than-expected Q1 orders and the persistence of concerns around potential tariff impacts, AI production cuts and the sustainability of China demand.”
The firm maintained its Equal-weight rating on the stock, highlighting lingering uncertainty across key end markets.
The bank’s analysts said, “Save for China strength, the new orders this quarter do not suggest upside to estimates for this year with little evidence of strong 2026 growth.”
China accounted for an estimated €1.8 billion in Q1 bookings, or 55–60 DUV tools, and now represents more than 25% of ASML’s annual sales, up from a prior guide of 20%.
However, Morgan Stanley warned that the sustainability of China demand remains a key risk.
On tariffs, the firm noted ASML has yet to quantify the potential impact. “We share the widely held view that the size and breadth of potential tariffing carries a preternatural risk for earnings forecasts,” analysts wrote, adding that ASML is working with customers and suppliers to minimize exposure and pushing for a “fair allocation” of tariff costs down the value chain.
Meanwhile, results from top customer TSMC are said to have offered some reassurance.
The Taiwanese foundry kept its capital expenditure guidance unchanged at $38–$42 billion and expects second-quarter revenue to rise 13% sequentially.
While this “is supportive of ASML’s own unaltered FY25 guide,” Morgan Stanley noted that “much still has to come through,” especially in EUV orders.
Despite recent strength in EUV margins, driven by pricing on newer 3800e tools and in-field upgrades, Morgan Stanley cut its 2026 EPS forecast to €26.91 and warned that “growth into FY26 remains a debate.”
The lowered target is based on a 24x multiple of the updated earnings estimate.