UBS names top European chip stocks to watch ahead of Q3 2026 earnings season

UBS analyst Francois-Xavier Bouvignies remains optimistic about European semiconductor stocks ahead of the third-quarter 2026 earnings season. The analyst highlights semiconductor capital equipment makers as the top picks, driven by AI-driven capacity expansion and a robust multi-year growth outlook.

At the top of the list is ASML Holding NV, with a Buy rating and a price target of €2,350. UBS expects the company to exceed 30% revenue growth in fiscal 2027 compared to the previous year. The EPS is estimated to increase by 15% to 20% compared to consensus by 2028. ASML's third-quarter revenue estimate of €12.1 billion surpasses the consensus by 3%.

For its upcoming third-quarter results on October 14, ASML anticipates updates to capacity targets for low NA and immersion systems, with growth projections surpassing 30% in both 2027 and 2028.

Ranking second on UBS's list is ASM International NV, also given a Buy rating and a price target of €1,325. The analyst forecasts 36% revenue growth for fiscal 2027, surpassing consensus by 7%. Similarly, ASM's EPS is projected to grow by 10% and 20% above consensus expectations in 2027 and 2028, respectively. The stock is currently trading at 7.9 times its 12-month forward EV-to-sales, which is higher than the 10-year average of 5.7 times.

UBS expects improved visibility in third-quarter results on October 27, driven by demand for advanced logic, memory, and mature-node products.

Completing the top three picks is STMicroelectronics NV, with a Buy rating and a price target of €80. The analyst's 2027 EPS estimate is about 20% higher than current consensus expectations. UBS forecasts silicon photonics revenues of approximately $2.0 billion in 2027, rising to $2.5 billion in 2028. Combined with AI power products, total datacenter revenues are projected at around $2.5 billion in 2027, accounting for about 14% of group sales.

This figure is expected to grow to approximately $3.8 billion or 19% of group sales by 2028. UBS anticipates a 10% quarter-over-quarter increase in third-quarter results on October 29, ahead of normal seasonality.