UBS Names ASML, SAP Among Top European IT Stocks for AI and Cloud Growth

UBS has highlighted a select group of European information technology companies poised to capitalize on long-term structural trends, including artificial intelligence, power, and longevity. In its Equity Compass report, the investment bank identified semiconductor equipment makers ASML and ASM International, along with software giant SAP, as key players with strong market positions.

Semiconductor Leaders Positioned for AI

UBS underscored the critical role of ASML as the dominant global supplier of lithography equipment, which is essential for manufacturing advanced semiconductors. The firm noted ASML's client list includes all major chipmakers like TSMC, Samsung, and Intel, giving it "truly defensive qualities." Analysts anticipate sustained tightness in the memory market, driven by structural growth in AI and the shift to High Bandwidth Memory (HBM).

While UBS sees a multi-year growth outlook for ASML, it also cautioned that the stock remains sensitive to macroeconomic conditions, which could lead to order deferrals. ASML's CFO recently stated the company has room to raise prices for its cutting-edge EUV tools, which are nearly fully booked through the end of 2027, according to the report.

ASM International was also selected as a key enabler of the industry's transition to new gate-all-around (GAA) transistor architecture. UBS highlighted the company's expertise in atomic layer deposition (ALD) and epitaxy, technologies that become more critical as chip designs shrink to the 2-nanometer level. The bank projects an acceleration in growth for ASM International in fiscal year 2027, driven by this technological shift.

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SAP's Cloud Transition Offers 'Long Growth Duration'

The third top pick, SAP, was praised for its execution on its cloud transition. UBS analysts believe the ongoing cloud migration cycle provides strong visibility for healthy, double-digit top-line growth. A key factor in this outlook is that only an estimated 40% of SAP’s client base has completed the upgrade, suggesting a long runway for future growth.

UBS also noted that recent weakness in SAP's share price, attributed to concerns about AI, represents an "attractive entry point" for investors. The analysis follows a recent agreement between SAP and EU antitrust regulators to make it easier for customers to switch service providers, which resolved a potential investigation.