European Technology Hardware "Q2 Playbook: Backing AI Winners in Semicap,..."

Research evidence excerpt

European Technology Hardware "Q2 Playbook: Backing AI Winners in Semicap,..."

Global Research

2 July 2026ab

European Technology Hardware Equities

Europe including UKQ2 Playbook: Backing AI Winners in Semicap,

Staying Selective in Analogue Technology

Francois-Xavier Bouvignies

Analyst

francois.bouvignies@ubs.com

Favour semiscaps, selective in analog and avoid telco equipment +44-20-7568 7105

We remain broadly constructive on the semiconductor sector heading into Q2 2026 Harry Blaiklock, CFA

earnings. Investor sentiment continues to be supported by resilient AI-driven demand, Analyst

which has extended the cycle across advanced semiconductors and semiconductor harry.blaiklock@ubs.com

equipment beyond earlier expectations. While the macro backdrop remains uncertain +44-20-7568 5385

and investors are increasingly focused on potential late-cycle headwinds, we believe

management teams currently have limited visibility into any meaningful slowdown and

are therefore unlikely to materially reduce H2 guidance until clearer evidence

emerges.Looking ahead to Q2 earnings and H2 more broadly, our preference remains

semicap over analogue, and analogue over telecom equipment. ASML remains our

top pick, followed by ASMI and STM. We continue to see meaningful upside to

2027–28 estimates across all three names, with UBSe EPS>10% above current

consensus EPS expectations 27/28E.

Semicap: AI-Led Investment Cycle Remains a Key Tailwind

We remain positive on semiconductor equipment, where AI-driven capacity expansion

continues to support a robust WFE cycle and provides both near-term earnings support

and improving multi-year visibility. We believe consensus still underestimates the

durability of AI-related demand, reflected in our 2027–28 EPS estimates, which are more