ASML's stock tumbled nearly 6% in one day after reports emerged that a Chinese firm had started mass-producing DUV lithography machines. These tools are a key part of ASML's tech dominance, so investors panicked. Bank of America sees this as an overreaction.
BofA kept its Buy rating on the Dutch chipmaker, arguing the market is focusing too much on headlines and not enough on fundamentals. ASML’s shares traded around $1,655 on July 27, 2026, before slipping roughly 4% more in early trading the next day.
China has been a major revenue source for ASML, historically making up about a third of sales. Export controls block ASML’s most advanced EUV machines from Chinese buyers, so its China revenue share is expected to drop to about 20% by 2026 a decline already factored into forecasts.
The recent scare involves immersion DUV lithography, which is less advanced than EUV. A Chinese company’s ability to mass-produce these systems raised alarms about competition, but BofA says this threat is exaggerated.
Looking ahead, the wafer fabrication equipment market is expected to hit at least $250 billion by 2028, with about 30% annual growth driven by AI investments. BofA highlights ASML’s strong pricing power and gross margins, projecting 2027 and 2028 earnings 6-7% above Wall Street’s consensus.
This dip might be a buying opportunity for investors betting on the AI-driven chip boom. If BofA’s optimistic earnings expectations pan out, the current stock price could seem undervalued in hindsight.
